Penang tunnel consortium member Zenith Construction Sdn Bhd could be exploring a joint-venture opportunity with an obscure firm, ETI Tech Corp Bhd, reports a business weekly.
“We have not ascertained the form the venture will take, but it is highly unlikely to be a reverse takeover,” The Edge quotes Zenith director Zarul Ahmad Zulkifli as saying.
ETI Tech Corp is a loss-making company under PN1/2001 status (Practice Note 1 of 2001, Guidance Note 5) that is mainly involved in investment holdings and the provision of management services and intends. Following restructuring, the group said it intends to focus on the “design and development of green and renewable energy”.
Practice Note 1/2001 is issued to highlight the obligation of a listed issuer to make immediate announcements if there is a default of interest and/or principal payments in respect of certain loans, including a credit facility which is 5 per cent or more of the net assets of the firm.
Bursa Malaysia Securities Berhad had publicly reprimanded the firm for breaching paragraph 9.03(1) & 9.04(1) of the Bursa Securities Main Market Listing Requirements read together with paragraph 2.1(d) of Practice Note
(PN1) for failing to make an immediate announcement in respect of the default in payment of credit facilities by its major subsidiary, ETI Tech (M) Sdn. Bhd.
ETI Tech Corp’s 2013 Annual Report noted the group had “defaulted on the repayment on bank borrowings and hire purchase payables amounting to RM27.0 million as at the reporting date. The default in repayment of borrowings indicated the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. Furthermore, the bank borrowings were pledged by the leasehold land, building and the fixed deposits of the Group coupled with the corporate guarantee provided by the Company in which the Group and the Company may be unable to realise these assets and discharge the liabilities in the normal course of business. The ability of the Group and the Company to continue as going concern is dependent on the bankers and creditors for appropriate financial support to enable it to meet its obligations as and when they fall due”.
For the year ended 28 February 2014, the company recorded a loss of RM9.7m on the back of turnover of RM5.0m.
Now, why would a tunnel developer be interested in such a company?
On 16 May, Zarul’s son Zarul Ikhwan Zarul Ahmad, 30, was appointed as executive director of ETI Corp. The stock price jumped.
ETI Tech Corp describes Zarul Ikhwan’s background as follows:
Zarul Ikhwan studied at Multimedia University with a Foundation of Mechanical Engineering and music courses at International College of Music and University Technology Mara.
Currently, he is a director of Virgo Inspirasi Sdn Bhd (VISB) and a non-executive director of Beringin Waja Sdn Bhd (BWSB).
Prior joining to VISB, he worked as a Front Office/Fleet Assistant with NAZA Ventures Sdn Bhd. He was assigned to oversee NAZA Venture’s limousine at Sheraton Imperial Hotel, Kuala Lumpur. Today in VISB, his roles include conducting interviews and selecting appropriate chauffeurs/drivers, managing time and formulating manpower, organizing annual budgets and assist process required and reports of each operation and overall cost.
Currently under BWSB, he handles few projects such as the construction of the new Malaysian Embassy in Moscow, Russia under the Consortium Bina Puri Beringin Waja Sdn Bhd, and some upcoming projects in the State of Penang.
On 23 May, the firm announced its intention to diversify its business activities to include “property development, construction and property investment”.
Just like the tunnel developer, ETI Tech now has its own China connections. On 31 May, ETI Tech entered into a MOU with Castel Engineering Ltd. Castel, founded in 1997, is a member of China Aerospace Science and Technology Corporation, which has seven R & D centres, six listed firms and 135,000 employees in China and Hong Kong.
Castel is involved in “renewable energy, smart city infrastructures, mobility and transportation tracking and industrial and systems engineering. Its products include wind turbines, photovoltaic, LED, solar, energy efficiency, satellite communications, intelligent transportation systems, government and enterprise application solutions”.
The MOU is aimed at forming “a collaboration company in Malaysia to provide top-class renewable and smart city solutions to governmental and commercial organisations”.