Systech Bhd, an E-business solutions and cybersecurity company, has announced multiple proposals aimed at propelling the company forward. One of the proposals involves the issuance of new shares, totalling up to 114.0 million shares, to raise approximately RM51.84 million in cash at 36.0 cents per share.
The group also plans to undertake a bonus issue of up to 160,656,399 new warrants based on 1 Warrant for every 4 existing Systech Shares held on a date determined later by the Board to reward existing shareholders.
Notably, Systech Bhd has proposed the acquisition of Wilstech Sdn Bhd for a total purchase consideration of RM75.0 million.
The group has entered into a conditional share sale agreement with Low Min Yew, Sea Capital LP, and Maybank Trustees Berhad to acquire the entire 552,255 ordinary shares in Wilstech Sdn. Bhd.
As per the deal’s terms, the RM20.0 million purchase consideration will be settled in cash, with the remaining amount issued through the issuance of 152.78 million shares in Systech at an issuance price of 36 cents per share.
The proposed acquisition offers the group an opportunity to expand its customer base and explore cross-selling opportunities. It also enables Systech to derive synergistic benefits through the acquisition of 100% equity interest in Wilstech.
Upon completion of the proposed acquisition, given the similarity in business nature, Systech may leverage Wilstech’s extensive knowledge in the IT industry and capitalize on Wilstech’s existing customer base.
According to the group, the conditional share sale agreement requires Wilstech to provide a net profit guarantee of not less than RM5.0 million for the next financial year, from April 1, 2024, to March 31, 2025.
To mitigate Systech’s risks, the company will retain RM30.0 million as security for the performance of the profit guarantee. Based on the net profit guarantee of RM5.0 million, this represents a PE multiple of 15 times.
Additionally, the existing director of Wilstech, Low Min Yew, will remain as the director upon the completion of the proposed acquisition and continue to lead and grow the operations of Wilstech.
Wilstech specializes in providing business-to-business (B2B) IT solutions, including web solutions, custom web and mobile application development, platform support, IT infrastructure solutions, IT administration and outsourcing, as well as the supply of IT hardware.
The company has also developed its in-house software called WilsONE, which is a business automation software.
Wilstech awarded Malaysia Digital Status, is also an authorized digitalization partner under the Geran Digital PMKS Madani Initiative — a government initiative to assist micro, small, and medium enterprises in improving digitalization applications in their daily businesses.
The acquisition, subject to the approval of Wilstech shareholders and Bursa Securities, is expected to be completed in the first quarter of 2024. Malacca Securities has been appointed as the principal adviser for the proposals.
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