The Board of Directors of NetX Holdings Berhad (“NetX” or “the Company”) wishes to announce that the Company had on 3 October 2023 entered into a Joint Venture Agreement (“JVA”) with Saudi Cold Storage Sdn. Bhd. (“SCS”) for the purpose of setting up and operate the Saudi fast-food outlet under the brand name of SAUDI BURGER (“Proposed JV”).
SCS is a private limited company incorporated in Malaysia which is principally engaged in the business of wholesaler and dealer of fresh and frozen foods, transportation logistics services, restaurant operator and franchise. SCS is a wholly-owned subsidiary of Saudee Group Berhad (“Saudee”), a public company listed on Main Market of Bursa Malaysia Securities Berhad.
Pursuant to the JVA, NetX and SCS intend to venture into a mutual business in order to operate SAUDI BURGER flagship store as well as future expansion plan including franchising outlet (“Project”) by incorporating a joint venture company or acquiring shares in an existing dormant company which is free from any encumbrances and any liability, at the shareholding structure of 51% and 49% respectively (“JV Company”).
The salient terms of the JVA are as follows:
i) Within 60 days from the date of the JVA (“Effective Date”), the NetX and SCS shall exercise the purchase of the shares in the JV Company.
ii) NetX and SCS shall cause the required number of shares in accordance with the following ratio or proportion of shareholding:
(a) NetX shall directly or through one or more of its affiliates or nominees, contribute to the amount of RM510,000.00 representing 51% of the issued and paid-up equity share capital of the JV Company; and
(b) SCS shall directly or through one or more of its nominees contribute amount of RM490,000.00 representing 49% of the issued and paid-up equity share capital of the JV Company.
iii) The JVA shall come into effect on the Effective Date and shall remain valid and subsisting in consistent with the Project, until and unless both parties mutually agreed to discontinue with the same. Either party may terminate the JVA upon mutual written agreement of the parties.
The Proposed JV marks a significant step forward for NetX’s to drive innovation and consumer change adoption that will bring greater value to NetX’s shareholders. Saudee’s experience with close to 4 decades as a halal certified food product is the perfect partner to venture into the continuous growing fast food consumer market in Malaysia.
The Proposed JV will pioneer the master franchise of an exciting new fast-food chain in the heart of Kuala Lumpur. The first flagship outlet will be located in the iconic main entrance of Sungei Wang Plaza in the heart of Bukit Bintang. This vibrant district is known for its bustling shopping, entertainment, and dining scene, making it the perfect location to introduce the Group’s exciting new offering.
In 2022, according to Statista, the retail value of fast food or limited-service restaurants in Malaysia amounted to around RM12.5 billion, an increase from RM10.3 billion in the previous year. The sales value of fast-food restaurants in Malaysia is expected to reach RM20.4 billion by 2026. This dynamic growth underscores the immense potential of the fast-food industry in the country, and SAUDI BURGER, as the master franchise holder, is poised to capitalise on this growth. (Source:
https://www.statista.com/)
The Proposed JV is not expected to pose any additional risks to the NetX Group other than operational risks associated to the business of JV Company.
The Proposed JV will not have any effect on the share capital and substantial shareholders’ shareholdings of NetX. The Proposed JV is also not expected to have any material immediate effect on the earnings per share, net assets per share and gearing of the Group for the financial year ending 30 November 2023.
The Proposed JV is not subject to approval of the shareholders of the Company or other relevant authorities.
Save as disclosed below, none of the directors, major shareholders and/or chief executive of the Company and/or persons connected with them have any interest, whether direct or indirect, in the Proposed JV:
i) Mr. Chen Chee Peng is an Independent Non-Executive Director of NetX and Saudee.
The Board of NetX, having considered all aspects of the Proposed JV, is of the opinion that the Proposed JV is in the best interest of the Company.
The JVA is available for inspection at the registered office of the Company at 22-09, Menara 1MK, No. 1 Jalan Kiara, Mont Kiara, 50480 Kuala Lumpur between 8.30 a.m. and 5.30 p.m. from Monday to Friday (except public holidays) for a period of three (3) months from the date of this announcement.
This announcement is dated 3 October 2023.
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