Accrelist says 12 buyers of its MClean stake not acting in concert

[SINGAPORE] Catalist-listed medical aesthetics and technology group Accrelist on Tuesday (Sep 29) defended its proposed RM30 million (US$7.4 million) divestment of its stake in Malaysia-listed MClean Technologies.

This followed queries from the Singapore Exchange (SGX) over the transaction’s mechanics, pricing and identities of the buyers.

Accrelist on Sep 15 proposed to offload 60 million shares in MClean – amounting to a 24.37 per cent stake – to 12 individual purchasers at a fixed price of RM0.50 per share.

The price represents a 33 per cent discount compared to MClean’s market trading price of about RM0.75 prior to the transaction announcement.

The company, which is involved in precision cleaning, packaging and plastic injection moulding services, is listed on Bursa Malaysia’s ACE market, a sponsor-driven board for companies that may not have a long profit track record.

Accrelist previously justified the pricing by noting it engaged an independent valuer who priced the shares between RM0.45 and RM0.47 in April, stating that a discount was necessary to attract buyers for a large, illiquid block of shares.

The transaction’s context includes the cross-directorship of Terence Tea, who serves as the executive chairman and CEO of Accrelist while concurrently chairing MClean’s board.

SGX questioned how the board established that the 12 purchasers were not acting in concert with one another or with any insiders at MClean, given the company stated it was unaware of how the purchasers were selected.

Accrelist clarified that it relied on confirmations from Sam Soong, a remisier at CGS International Securities Malaysia who gathered the purchasers, that none of the buyers are acting in concert. Soong confirmed he was approached by each purchaser separately.

Furthermore, MClean’s directors, executive officers and Wong Chin Ho – who highlighted Soong’s introduction to Accrelist – provided confirmation that no such arrangements exist with the buyers.

SGX also sought evidence of the purchasers’ ability to fund the RM30 million transaction, noting that no deposit was collected and completion could take up to nine months. Accrelist stated it did not obtain direct evidence of the buyers’ financial capability to complete the share sale agreements.

Instead, the company is relying on the legal obligations of the contracts, where the purchasers provided warranties that their funds stem from legitimate sources. Accrelist noted it is entitled to claim specific performance to legally compel the buyers to complete the proposed disposal.

Accrelist was previously reported to have acquired its 28.5 per cent in MClean for RM9 million, but later sold 10 million shares at RM0.25 each.

The proposed major transaction is subject to shareholder approval at an extraordinary general meeting on Wednesday, as well as approval from Bursa Malaysia. Accrelist expects to secure the necessary approvals, stating that the divestment will realise value for the group and improve its liquidity position.

Accrelist shares fell 4.5 per cent or S$0.008 to close at S$0.171 on Tuesday, before the news.