KUALA LUMPUR (Nov 11): Quarry mining player Minetech Resources Bhd (Minetech) announced that it has entered into a memorandum of agreement (MoA) to acquire Perak property developer Glamour Heights Sdn Bhd (GHSB) and two of its existing projects - The Meru Dream Park and a condominium - for RM27.45 million.

The purchase, which marks its first step into the property development market, also includes a profit guarantee on the park and condominium projects to the tune of RM27.38 million from GHSB.

The acquisition will be fully satisfied via the issuance of new ordinary shares of 15 sen and hence is not expected to drain its cash flow, said the group in a press statement.

It noted, however, that this method is likely to trigger a mandatory general offer by GHSB as one of its key persons, Low Choon Lan, currently has a 26.76% indirect stake in Minetech.  

But the group will seek a waiver from the exchange, said its group executive director Chin Leong Choy. 

"Alternatively, Minetech may consider a hybrid form of the proposed acquisition," he said.

Chin said the rationale of venturing into property development is to transform Minetech from a traditional quarry mining company to a comprehensive building solutions provider.

"This means we are the suppliers for the raw material from our quarry sites. We build and construct the building structures, we lay the roads, and so on.

"Our investors can now see more clearly the reasons for our recent corporate exercises as they are now falling into place nicely," Chin said.

Minetech had previously proposed to undertake a reduction of its issued and paid-up share capital via the cancellation of 5 sen of its 20 sen ordinary share's par value.

The group had also proposed a one-for-one renounceable rights issue to raise up to RM49.9 million to purchase quarry sites, distribution of heavy machineries, working capital, repayment of bank borrowings, and corporate exercises expenses.

Minetech inched up one sen or 7.14% to 15 sen today, with 14.78 million shares traded, giving it a market capitalisation of RM99.76 million.