Bhd's acquisition target, Trackwork & Supplies Sdn Bhd, has received a letter of demand from a customer for a sum of RM19mil.
The demand letter claims that some of the machines the customer received from railworks company Trackwork are defective and is seeking liquidated agreed damages, cost of rental and expenses for replacement machines.
AWC is in the midst of a proposed acquisition of three million shares or 60% equity interest in Trackwork for a cash and share deal worth RM43.5mil.
The group said it is currently assessing the implication of the claim with regards to its purchase proposal.
"The Board has decided to only proceed with the completion of the Proposals when the Sellers and Trackwork are able to settle the aforesaid claim without any material negative impact on the financial performance of Trackwork.
"In this regard, and if necessary, the Company will seek to include the settlement or resolution of this claim to the Company's satisfaction as a condition precedent to the SSA vide a supplemental SSA.
"For the avoidance of doubt, the Company will not assume any liability arising from this development," it said.
AWC added that the development would be discussed at the extraordinary general meeting, which was slated for 2pm today.
A successful completion of AWC's stake purchase would see Trackwork contributing more than 25% to the group's net profits, resulting in a diversification of its existing core business to include rail-related works.
Acquisition of Trackwork is on track again.....should we expect better days ahead and upward movement of price ? The past few days have seen an upward push on both volume and price. Hopefully it’s sustainable.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
raytheclay
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Posted by raytheclay > 2018-06-05 22:55 | Report Abuse
May be better on hindsight since there’s so much of negative news on rail business with HSR scrapped and uncertainties on ECRL