TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS) : RELATED PARTY TRANSACTIONS PROVISION OF FINANCIAL ASSISTANCE TO SUBSIDIARY COMPANY

NOVA MSC BERHAD
05 October 2021

Type Announcement
Subject TRANSACTIONS (CHAPTER 10 OF LISTING REQUIREMENTS)
RELATED PARTY TRANSACTIONS
Description PROVISION OF FINANCIAL ASSISTANCE TO SUBSIDIARY COMPANY

 

1.      Introduction 

Nova MSC Berhad (“NovaMSC” or “Company”) wishes to inform that its wholly-owned subsidiary, NovaCITYNETS Pte Ltd (“NCN”) has on 5 October 2021 entered into a Loan Agreement with Dex-lab Pte Ltd (“DEX”), a 60% owned subsidiary of the Company, to grant and/or make available cash advances to DEX (“Loan”) on a clean basis.

Pursuant to the Loan Agreement, NCN agree to grant and/or make available a cash advance of up to Singapore Dollar One Million (SGD1,000,000 [approximately RM 3.08 million]) to DEX upon a cash call by DEX.

 

2.      Information on NCN and DEX

 

2.1    Information of NCN

NCN was incorporated in Singapore and is a wholly-owned subsidiary of NovaMSC.  Its principal activities are those relating to the provision of e-business solutions for the government and construction industry.

 

2.2    Information of DEX

DEX was incorporated in Singapore in 2020 and is a 60% owned subsidiary of the Company. The principal activities are those related to the development and marketing of robotics and artificial intelligence related products and services.

 

3.      Salient Features of the Loan Agreement

 

3.1    The Loan shall bear interest on the principal amount outstanding at any given time at the rate of 6.0% (six per centum) per annum. Interest shall be computed on the Loan on a daily basis and based on actual days elapsed and a year of 365 (three hundred and sixty-five) days.

 

3.2    The Loan is available to DEX for a period of six months (“Term”) and shall be automatically be renewed for a consecutive period of six months or in such manner or extended date as may be mutually agreed between all the parties.

 

3.3    The Loan shall be unsecured and rank pari passu with other present and future unsecured obligations.

 

3.4    NCN may cancel the Loan forthwith and without any prior written notice in case of any of the following events, which constitute default by DEX:

(a)     failure by DEX to pay to the NCN any interest due;

(b)    failure by DEX to comply with any other term or condition of this Agreement, and if such failure is capable of being remedied, the failure remains not remedied for more than 30 (thirty) days after NCN gives notice thereof to DEX;

(c)     the appointment of a receiver over any material part of the assets or undertakings of DEX;

(d)    the occurrence of any other event which in the reasonable opinion of NCN would have a materially adverse effect on DEX’s ability to comply with any of its obligations under the Loan Agreement; or

(e)     the transfer of DEX’s business (or any part thereof) to a third party outside the group of companies of which NCN and DEX originally are part of.

 

4.      Rationale

 

The Loan provides DEX a working capital for its operations requirements and will be utilized for its operating expenditures, which shall include, but not limited to, staff cost, travelling, rental and other administrative expenses.

 

5.      Source of Fund

 

The Loan is fully financed from internally generated funds.

 

6.      Effects of the Loan

 

6.1    Issued Share Capital and Substantial Shareholders’ Shareholdings

 

The Loan will not have any effect on the issued share capital and the shareholdings of the substantial shareholders in the Company.

 

6.2    Earnings Per Share, Net Assets Per Share and Gearing

 

The Loan will not have any material effect on NovaMSC Group’s earnings per share and net assets per share for the current financial year. The Loan will not have any effect on the gearing of the NovaMSC Group for the current financial year.

 

7.      Risk Factors

 

The Board of Directors of the Company (“Board”) does not envisage any specific risk associated with the Loan, apart from default risk due to the general business risks faced by DEX.

 

8.      Interests of Directors, Major Shareholders and Persons Connected with Them

 

Save as disclosed below, none of the Directors and/or major shareholders of the Company and/or persons connected with them has any interest, direct or indirect, in the Loan.

 

Mr Sunny Loh Guan Huat is a director and shareholders of NovaMSC. He is also a director and major shareholder of DEX.

 

9.      Approval Required

 

The Loan is not subject to the approval of the shareholders of NovaMSC nor from any relevant governmental authorities.

 

10.    Directors’ Statement

 

The Board (save for Mr Sunny Loh Guan Huat who has abstained from all deliberation and voting on the Loan), having considered all aspects of the Loan (including but not limited to the terms and the rationale), is of the opinion that the Loan is fair and reasonable, in the best interest of NovaMSC Group and is not detriment to NovaMSC Group and its shareholders.

 

11.    Related party transactions

 

The Loan is a provision of financial assistance under Rule 8.25 of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad (“AMLR”) and in view of the interests disclosed in Section 8 of this announcement, the Loan is deemed a related party transaction pursuant to Rule 10.08 of the AMLR.

 

12.    Estimated Timeframe for Completion

 

The Loan is expected to be disbursed before 31 October 2021.

 

13.    Highest Percentage Ratio

 

The highest percentage ratio applicable to the Loan pursuant to Rule 10.02(g) of the AMLR is 4.55%. In this regard, the approval of the shareholders of NovaMSC is not required for the Loan.

 

14.    Document for Inspection

 

A copy of the Loan Agreement will be made available for inspection at the Company’s registered office at No. 5-1, Jalan Radin Bagus 9, Bandar Baru Sri Petaling, 57000 Kuala Lumpur, Wilayah Persekutuan, Malaysia during normal business office hours from Monday to Friday (except public holidays) for a period of 3 months from the date of the announcement.

 

This announcement is dated 5 October 2021.