KUALA LUMPUR (May 14): Loss-making BCM Alliance Bhd (KL:BCMALL) is divesting its commercial laundry business to its former executive director Ho Kee Wee for RM18 million in cash.
At the same time, the company has proposed to consolidate its shares on a 10-to-one basis.
The disposal consideration of RM18 million equals 90% of its market value of RM20 million based on the closing price of one sen on Wednesday.
In a bourse filing, BCM said it expects to record a pro-forma gain of RM4.2 million from the disposal. Of the RM18 million proceeds, the bulk or RM15 million will be used to acquire new medical devices and equipment, RM2.05 million to fund its working capital and the remaining RM950,000 to cover estimated expenses for the proposals.
BCM has entered into a share sale agreement with CS Strategic Holdings Sdn Bhd for the proposed disposal of the entire equity interest in CS Laundry System Sdn Bhd, which generates all of its revenue from the Malaysian market.
Ho is the sole director and sole shareholder of CS Strategic Holdings, which is principally involved in investment holding.
Meanwhile, CS Laundry is principally involved in the supply, installation, testing and commissioning of commercial laundry equipment.
For the past three financial years, the laundry, medical and healthcare businesses have been the group’s major revenue contributors.
In the financial year ended Dec 31, 2024 (FY2024), the laundry business contributed RM53.07 million in revenue, or 53% of the total revenue of RM100.51 million.
BCM said the proposed disposal is not expected to result in the group becoming a cash company or a Guidance Note 3 company.
For the share consolidation exercise, BCM will see its share base reduced to 203.4 million from 2.03 billion, which is intended to reduce price volatility and increase flexibility in fixing the issue price for future corporate exercises.
The proposals are expected to be completed by the third quarter of 2025, pending approvals from shareholders and Bursa Malaysia.
As at end-December 2024, the group’s accumulated losses stood at RM44.3 million, while total borrowings came in at RM7.88 million.