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HUP SENG INDUSTRIES BERHAD ("Hup Seng" or "the Company")
- Variation in respect of the Utilisation of Proceeds from Hup Seng’s Initial Public Offering ("IPO"); and
- Acquisition of Warehouse
The Board of Directors is pleased to announce that Hup Seng Hoon Yong Brothers Sdn Bhd ("HSHY"), a wholly-owned subsidiary of Hup Seng, has on 23 June 2001 entered into a sale and purchase agreement ("Agreement") with Malaysian Industrial Estates Berhad ("the Vendor") to purchase an existing warehouse and its entailing state leasehold land measuring 1,613.09 square metres (equivalent to 18,690.16 square feet) located in Kawasan MIEL Jaya Gading, Kuantan ("Existing Warehouse") for a cash consideration of RM710,000 ("Acquisition of Warehouse").
HSHY paid an initial deposit of RM142,000 (being 20% of the total purchase price of the Existing Warehouse) upon the execution of the Agreement and the balance of RM568,000 shall be payable by HSHY within three months from the date of the Agreement or within 14 days from the date of receipt by HSHY of the Vendor’s written notice and confirmation that the Pahang State Authority has granted the necessary approval for the transfer of the Existing Warehouse to HSHY.
2. Funding for the Acquisition of Warehouse and Variation of IPO Proceeds Utilisation
The Existing Warehouse shall be purchased by HSHY with all the rights, title, interest of the Vendor in the Existing Warehouse and free from all encumbrances other than those imposed by the provisions of the Agreement and the conditions expressed or implied affecting the document of title to the Existing Warehouse when issued and subject to the terms and conditions contained in the Agreement.
It was disclosed in Hup Seng’s Prospectus dated 25 September 2000 ("Prospectus") that an amount of RM2,243,000 from the IPO’s proceeds will be set aside for the purposes of factory expansion and increase in warehouses’ capacity at branches. Of this amount, RM695,000 was to be utilised for the construction of a new warehouse in Kuantan with a planned built-up area of approximately 20,000 square feet.
3. Rationale for the Acquisition of Warehouse
The entire purchase consideration for the Acquisition of Warehouse of RM710,000 shall be funded from the proceeds of Hup Seng’s IPO. In this regard, the Company shall utilise the aforesaid sum of RM695,000 earlier set aside for the construction of a new warehouse and the balance amount of RM15,000 shall be sourced from the portion of IPO’s proceeds previously envisaged to be utilised for the working capital requirements in order to fully satisfy the total purchase consideration of the Acquisition of Warehouse ("Variation of IPO Proceeds Utilisation").
4. Conditions for the Acquisition of Warehouse and Variation of IPO Proceeds Utilisation
In its Prospectus, Hup Seng had disclosed that an amount of RM695,000 would be utilised for the construction of a new warehouse in Kuantan, which construction was then expected to commence in May 2001 and completion by October 2001. However, Hup Seng has been unable to find a suitable location for the construction of its new warehouse in Kuantan. Instead, the Company was able to identify an existing factory building in Kuantan, which meets the storage space requirement for Hup Seng’s stocks.
Furthermore, the Existing Warehouse is ready for immediate use and this would release Hup Seng’s management from the requirement of having to spend their time supervising the construction of a new warehouse and instead focus their attention on the operations and business of the Hup Seng Group.
5. Directors’ and Substantial Shareholders’ Interests
The completion of the Acquisition of Warehouse is pending upon the receipt by HSHY of the necessary consent from the Pahang State Authority for the transfer of the Existing Warehouse to HSHY.
Save as disclosed above, the Acquisition of Warehouse and the Variation of IPO Proceeds Utilisation are not subject to the approvals of shareholders of Hup Seng or any authorities.
None of the Directors nor substantial shareholders of Hup Seng nor persons connected to them have any interest, whether direct or indirect in the Acquisition of Warehouse and the Variation of IPO Proceeds Utilisation.
This announcement is dated 19 July 2001