KUALA LUMPUR (Jan 20): Nexgram Holdings Bhd is looking to appoint an independent accounting firm to be the special auditor for its proposed takeover of Ire-Tex Corp Bhd, as Bursa Securities Bhd had raised a red flag over the conduct of the takeover.

As the regulator has done so, Nexgram said its takeover offer will not succeed, should nothing be done about it.

To recap, Securities Commission Malaysia (SC) said it has come to the regulator's attention that Nexgram, which is making a voluntary takeover offer for the securities of Ire-Tex, had entered into agreements this month to dispose of three of its subsidiaries — after the SC sought information from Nexgram on the subsidiaries in relation to the accuracy of information disclosed in the offer document.

This came after the SC had cleared the takeover offer document on Dec 10, 2015, which was despatched to the holders of Ire-Tex securities on Dec 11, 2015. Nexgram Holdings had on Nov 20, 2015 made the take-over bid for Ire-Tex securities.

In a filing with Bursa Malaysia today, Nexgram said it had deliberated on Bursa Securities’ letter on Jan 15, saying the regular was unable to proceed with Nexgram’s processing of the listing application and draft circulation, until the enquiries made by Bursa Securities were addressed.

“The Nexgram board (of directors) has deliberated on the (aforesaid) matter and wishes to announce that it is taking steps to identify an independent qualified accounting firm to undertake the role of special auditor,” said Nexgram in the filing.

For now, the company said it had compiled and shown the due diligence committee, documents and statements relating to the assets in question, while also having scheduled and authorised representatives of its due diligence committee to travel directly to Indonesia for purposes of conducting an independent verification on those certain assets.

“Bursa Securities’ position will directly affect the takeover offer. In the event [that] Bursa Securities decides not to proceed with the processing of the listing application and draft circular, the only logical conclusion is that the condition of the offer of obtaining Nexgram shareholders’ approval at the EGM, will not be met within the stipulated timeframe under the code,” said Nexgram.

“In such circumstances, the takeover offer will not succeed.”

Nexgram fell by nearly half a sen of its market value to six sen a share or RM122.3 million, at noon break.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)