Under the terms of the deal, Enviro-Hub will pay a cash consideration of $23.4 million and issue 292.5 million new shares at a pre-determined price of 8 cents apiece, which amounts to a total value of $23.4 million.
In the acquisition announcement, the owners of PGSB, Law Siau Woei (LSW) and Choo Kuan Ping, also known as the vendors, had warranted that the company shall achieve an aggregate audited net profit after tax (NPAT) of not less than $23 million for the profit guarantee period.
Should the audited NPAT during the profit guarantee period turn out less than the profit guarantee, then the amount equivalent to the shortfall will be set-off against the consideration that the vendors are entitled to receive from Enviro-Hub, after the profit guarantee period being the balance 37.5% of the consideration, or $17,550,000.
As PGSB failed to meet the profit guarantee in its entirety during the profit guarantee period, Enviro-Hub has opted to take legal recourse.
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The vendors are expected to pay the full amount of RM23 million within seven days from the date of receipt of the letter of demand.
Shares in Enviro-Hub closed 0.1 cent lower or 4.348% down at 2.2 cents on June 10.
