KUALA LUMPUR (March 20): SCGM Bhd’s substantial shareholders are injecting their agriculture-related business into the cash company as part of plans to regularise the listed entity after disposing of its core business back in 2022.

SCGM has entered into a heads of agreement (HOA) to acquire Eramas Global Group Sdn Bhd from Chin Kok Tian, Yan Hua Lan, Tan Ah Tek, Gan Chuan Lee, Tey Chee Chin, Tan Tai Chong and Lau Sie Khian at a price to be determined later.

Eramas is involved in the sale and distribution of coconut-related products, palm oil and fat products, and dairy products to local and overseas markets as well as manufacturing of coconut and palm oil-related products, SCGM told Bursa Malaysia on Wednesday.

The proposed acquisition is deemed a related party transaction because Chin, Yan and Ah Tek collectively hold a 24.15% stake in SCGM.

The definitive agreement will be entered into between both parties within 180 days after the HOA, with an automatic extension of 30 days upon expiry.

SCGM is proposing to satisfy the purchase consideration either by way of cash or issuance of new shares at an issue price of 61.5 sen apiece.

SCGM became a cash company in September 2022 after it completed the disposal of core business Lee Soon Seng Plastic Industries Sdn Bhd to Mitsui & Co Ltd and FP Corp for about RM556.99 million cash.

The group subsequently distributed dividends and capital repayment totalling RM2.21 sen per share.

The group’s executive chairman Datuk Seri Lee Hock Seng, patriarch of the founding Lee family, has been paring down his shareholdings since the disposal and still owns 5.2% director interest in the group as at July 31 last year, according to SCGM’s latest annual report.

SCGM was established in 1984 and through Lee Soon Seng, the group manufactures thermoform food and beverage packaging. It was listed in 2008.

Shares of SCGM closed half sen or 0.8% lower at 60.5 sen on Wednesday, giving it a market capitalisation of RM117.13 million.