KUALA LUMPUR (Aug 16): Privately owned rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd has signed an agreement to acquire up to 51% stake in electrical engineering firm Pestech International Bhd (KL:PESTECH).
The latest proposal comes just a day after construction giant IJM Corp Bhd (KL:IJM) aborted its plan to acquire a 44.83% stake in Pestech for RM124 million, due to unmet conditions in the acquisition agreement.
A heads of agreement was signed for the proposed subscription of at least 1.03 billion shares for 15.5 sen apiece totalling about RM160.07 million, Pestech said in an exchange filing. Dhaya Maju will conduct a due diligence review of Pestech, it noted.
“The proposed subscription represents a strategic and synergistic collaboration between Pestech and Dhaya Maju, aimed at enhancing competitiveness, offering more comprehensive solutions, enabling participation in larger-scale projects, and expanding the geographical footprint of both parties,” it said.
The two parties will negotiate and executive a definitive agreement within two months, Pestech said. During the negotiation period, Pestech will not discuss with any other parties any equity fundraising, or respond to any approach by other parties, the company noted.
“Both parties will be able to expand their capabilities, offering more holistic and integrated construction and project management solutions and services to their customers by leveraging on each other’s strengths and competencies, particularly in rail-related infrastructure development,” it said.
Dhaya Maju is mainly involved in the engineering, procurement, construction and commissioning of railways and highways, railway engineering and technology and real estate development. The company is better known as the main contractor for the Klang Valley Electrified Double Track project.
On Thursday, Pestech said it would explore alternative funding options amid financial challenges, following the termination of the deal with IJM.
Pestech’s cash and bank balances amounted to RM62.54 million at the end of March, while total borrowings stood at RM1.10 billion, according to its latest financial statement.
Despite the termination of the agreement, Pestech said that it does not affect the existing joint venture with IJM for the automated people mover project at the Kuala Lumpur International Airport (KLIA).
At 3.12pm on Friday, shares in Pestech were 1.5 sen or 8.82% higher at 18.5 sen, valuing the group at RM179.39 million.