KUALA LUMPUR (Oct 8): Property developer Seal Inc Bhd (KL:SEAL) said it needs more time to evaluate its planned purchase of an additional 10% stake in solar panel installer MSR Green Energy Sdn Bhd.
Seal and the sellers have agreed to extend the deadline to enter into a definite agreement to Oct 30, the loss-making company said in a bourse filing on Tuesday. It did not state the initial deadline for the deal.
MSR is currently 20%-owned by Seal. The planned purchase of another 10% would be a related party transaction as MSR is 40.8% owned by KVC Corp Sdn Bhd, which is linked to Seal’s 30.7% shareholder Aaron Chen Khai Voon.
MSR is primarily involved in the installation and servicing of solar photovoltaic systems, renewable energy project management, consultancy, construction, and electrical works.
In August, Seal proposed to buy the additional 10% stake in MSR for RM21 million. Of this, 7.1% would be acquired from Ong Kah Hui for RM14.88 million and 2.9% from Qiang Xiao Yu for RM6.11 million.
The planned acquisition received a guarantee from the sellers that MSR will achieve a cumulative profit after tax of at least RM21 million for the two-year period ending Dec 31, 2025 (FY2025).
MSR’s net loss narrowed to RM10.12 million in FY2022 from RM14.28 million in FY2021, with revenue rising 5.15% to RM8.92 million from RM8.49 million, according to the firm's accounts filed with the Companies Commission of Malaysia. As of end-FY2022, MSR had retained losses of RM13.28 million and negative total equity of RM8.28 million.
As for Seal, the company posted a net loss of RM3.16 million for the financial year ended June 30, 2024 (FY2024), versus a net profit of RM11.74 million for FY2023, as revenue fell 70% to RM15.7 million from RM51.5 million.
As of end-June, Seal had long-term borrowings of RM61.19 million and short-term borrowings of RM12 million. It also had a trade payable of RM7.2 million and other payables and accruals of RM62.65 million.
Its cash and bank balances stood at RM8.32 million, 45% less than RM15.07 million a year ago.
Separately, Seal has proposed diversifying into the renewable energy business, as the company seeks new business opportunities to improve its business resilience and diversify income sources from the investment in renewable energy.
Seal said the diversification will take immediate effect upon obtaining approval from its shareholders at its upcoming extraordinary general meeting.