HHGROUP (0175): HENG HUAT RESOURCES GROUP BHD proposes acquisitions, diversification into property development
KUALA LUMPUR (Oct 25): Heng Huat Resources Group Bhd, which is involved in the manufacturing and trading of biomass material, has announced the proposed diversification into property development and a series of acquisitions.
In a filing with Bursa Malaysia, it said the proposed diversification was undertaken to facilitate Heng Huat Group’s plans to diversify its earnings base through the property development business arising from the proposed Kulim land acquisition.
Heng Huat Group is principally involved in the manufacturing, and trading of biomass materials and value-added products focusing on oil palm empty fruit bunch fibre and value-added products as well as coconut fibre and value-added products.
It has proposed to acquire 1.02 million shares in MG Furniture Sdn Bhd, the manufacturer and seller of furniture specialising in bedding sets, representing 51% equity interest in MG Furniture for RM28 million.
Heng Huat said the acquisition will be satisfied via the issuance of 65.12 million new ordinary shares in Heng Huat at an issue price of 43 sen each.
"Following the MG Furniture acquisition, Heng Huat Group intends to expand its marketing, distribution and customer coverage to developed countries with growth opportunities in the export market for the custom-made furniture that is currently served by MG Furniture.
"This will be achieved by tapping into MG Furniture’s network of distributors/retailers and/or customers to market Heng Huat Group’s mattresses and other related products overseas," it said.
It also announced the proposed acquisition by its wholly-owned subsidiary Fibre Star (M) Sdn Bhd of two parcels of leasehold land in Daerah Seberang Perai Selatan, Penang, erected upon with a warehouse, office and store with ancillary buildings from Heng Huat Furniture Sdn Bhd for RM13 million.
Heng Huat also announced two other proposed acquisitions by its subsidiaries, namely two parcels of freehold land in Penang for RM260,000 and 133 lots of leasehold land in Kulim, Kedah for RM27 million.
The proposed acquisitions by its subsidiaries would be made via consideration of issuance of shares and cash.
Heng Huat Group has yet to finalise its plans for its property development business, which may include the construction of a dormitory for centralised accommodation centre on certain lots of Kulim Land to be rented out to factory workers in and around the Kulim High-Tech Park, industrial buildings or a mix of commercial and industrial areas.
Heng Huat Group has also not finalised the type of development to be undertaken on the Kulim land.