KUALA LUMPUR (Dec 22): Green Packet Bhd has proposed a new agreement to sell its wholly owned Labuan investment banking business, Oasis Capital Investment Bank Ltd (OCIB), to Velocity Capital Sdn Bhd (VCSB) for RM11 million, which is half the RM23 million initially proposed to a different buyer.
In a local bourse filing on Friday (Dec 22), the digital solutions provider said it has entered into a share sale agreement with VCSB, a wholly owned unit of Velocity Capital Partner Bhd (formerly known as CSH Alliance Bhd).
In March, Green Packet intended to sell OCIB to WKJ Capital Equity Sdn Bhd for RM23 million. However, the proposed transaction was unable to proceed as OCIB failed to secure the necessary approval from the Labuan Financial Services Authority (LFSA) within the stipulated time frame.
Note that the latest share sale agreement with VCSB is still subject to approval from the LFSA.
Barring any unforeseen circumstances, the disposal is expected to be completed in the first quarter of 2024.
The group said the purchase consideration of RM11 million is on a “willing seller willing buyer” basis, which will be satisfied via cash.
Velocity Capital’s cash and bank balances stood at RM20.56 million as at end-September 2023, according to its latest financial statement.
“The purchase consideration of RM11 million will be used to retire an inter-company loan of RM10 million and to fund any future business expenses and expansions to be undertaken by Green Packet,” Green Packet said.
The group is expected to gain RM896,005 from the disposal of its shares in OCIB.
Explaining the rationale behind the disposal, Green Packet said OCIB’s key services are not aligned with Green Packet’s business direction, which is to focus on building a fundamentally strong organisation and growing the digital platform businesses.
“Green Packet aims to reduce unproductive operation expenses and liability and intends to use the sales proceeds to retire the inter-company loan and working capital,” it said.
Moreover, the disposal is expected to improve the group’s cash flow position and reduce its borrowings.
None of its directors and major shareholders are connected or have any direct or indirect interests in the share sale agreement, except for its former director Kenny Khow Chuan Wah, who resigned on Dec 4 and is also executive director (ED) of Velocity Capital. However, Velocity Capital’s filing on Friday showed that Khow has resigned from the board to pursue other interests.
Meanwhile, Green Packet independent and non-ED Datuk Chong Mun Phing is also an independent and non-ED of Velocity Capital.
Nonetheless, the group said both Khow and Chong have abstained and will continue to abstain from all deliberations and voting for the share sale agreement at the group’s meeting.
Shares in Green Packet, which has fallen 42.86% year-to-date, settled unchanged at four sen on Friday, valuing the group at RM80.11 million. Meanwhile, Velocity Capital shares also closed unchanged at 4.5 sen, with a market capitalisation of RM55.95 million.