KUALA LUMPUR (June 28): Hextar Technologies Solutions Bhd (HexTech), which has been in search of an IT business for months, is now selling land to entities that are partly owned by its controlling shareholder Datuk Eddie Ong.

Concurrently, HexTech proposes a 30-for-one bonus issue that will enlarge its share capital to 3.99 billion shares.

The proposed land sales will enable HexTech to raise RM78.3 million cash. It has no plan for dividend payment. HexTech said in the filing with Bursa Malaysia that it will use most of the proceeds for expansion of its technology businesses (RM68 million) and working capital (RM8.71 million) within the next two years.

Meanwhile, one of the land buyers, SWS Capital Bhd, in which Ong also holds a 13.07% stake, announced it will diversify into the property development business and will change its name to Hextar Homes Bhd.

The parcels of tracts that SWS Capital is purchasing are in Nilai, Pasir Gudang and Klang, including a parcel of leasehold industrial land measuring 130,674 sq ft in Pasir Gudang and a 104,539 sq ft of leasehold vacant land in Klang, plus five (5) adjoining parcels of freehold industrial land in Bandar Nilai Utama, Negeri Sembilan. In total, SWS Capital will fork out RM61.61 million cash for the land deals.

To fund the land purchase, SWS is proposing a renounceable rights issue of up to 2.38 billion new ordinary shares at an issue price of 12 sen per right share, on the basis of six rights shares for every one existing share.

SWS said the proposed rights issue has a minimum target of raising RM180 million.  

Another buyer is Hextar Holdings Sdn Bhd, which is taking over HexTech’s wholly owned unit Channel Legion Sdn Bhd (CLSB) that owns land in Pulau Indah, Port Klang. Hextar Holdings is paying RM16.7 million to take over CLSB.

Hextar Holdings is Ong’s investment vehicle that holds stakes in several public-listed companies, for instance a 62.53% stake in Hextar Industries Bhd, 58.01% in Hextar Global Bhd, and 20.16% in Pekat Group Bhd.

HexTech executive director and major shareholder Ong owns a 64.7% direct stake and a 35.3% indirect stake in Hextar Holdings. He also has a 12.97% direct stake and a 54.77% indirect stake in HexTech, and a 13.07% stake in SWS. Therefore, the proposals are deemed related party transactions. 

HexTech said the proposals were made to unlock the value of its investments, monetise its investments, and to dispose of its non-core assets to reflect the group’s business focus in the technology businesses.

AmInvestment Bank Bhd has been appointed the principal adviser for the proposals, which are expected to be completed by the first half of 2024.

In a separate filing, SWS said the acquisitions of the Pasir Gudang and Klang properties from HexTech will contribute to the expansion of its property segment.

In line with that, SWS proposed a joint development between its wholly owned Skywood Residence Sdn Bhd, and partners Winterland Property Sdn Bhd and Theta Property Sdn Bhd, via a memorandum of understanding for the development of two blocks of commercial building, being part of a mixed development project located in Sungai Buloh, Selangor.