Zen Tech Clarifies To Bursa On Share Swap Amidst Subsidiary’s Missed Profit Guarantee
Zen Tech International Berhad has provided detailed clarifications to Bursa Malaysia regarding its proposed share swap involving its 70%-owned subsidiary, Alpha Fintech Sdn. Bhd., and Hiasset Group Sdn. Bhd.. The move comes after Bursa Malaysia issued a query seeking further information on the transaction, which sees Zen Tech swapping its 40% direct equity interest in Alpha for a 40% direct equity interest in Hiasset.
A key point of clarification from Zen Tech was a typographical error in its earlier announcement. The profit guarantee for Alpha, initially stated as RM2.5 million in a July 3, 2025 announcement, should correctly be read as RM2.3 million, aligning with a previous disclosure from April 2, 2024.
The primary justification for the RM3.5 million Proposed Share Swap stems from Alpha’s significant financial underperformance. Zen Tech confirmed that Alpha has failed to achieve its stipulated profit guarantee for the financial period ended June 30, 2025.
For the financial year ended June 30, 2024, Alpha recorded a Net Loss After Tax of RM4,052,524 and a stark reduction in Net Assets to just RM139,892. This significant decline in net assets was attributed primarily to the increase in total liabilities due to the substantial net loss.
- The situation further deteriorated for the financial period ended June 30, 2025, with Alpha reporting an unaudited Net Loss After Tax of RM426,551 and moving into a Net Liabilities position of RM286,658.
Zen Tech clarified that the RM3.5 million valuation for the Proposed Share Swap was mutually agreed upon with LKA (the counterparty), largely because Alpha was unable to fulfill its RM2.3 million profit guarantee obligation and is currently unable to service its debts based on its operations. This value also represents an outstanding balance from Zen Tech’s original acquisition of Alpha, which Zen Tech had previously settled via a third-party loan.
Zen Tech’s original investment cost in Alpha was RM10 million, with the investment completed on June 16, 2025.
Despite the share swap, Zen Tech retains rights of recourse under the Share Sale Agreement dated April 2, 2024, with the vendor of Alpha, Mr. Koh Chee Siong. This agreement stipulates that if Alpha fails to achieve the profit guarantee for any of the financial periods ending June 30, 2025, 2026, or 2027, Mr. Koh Chee Siong is obligated to pay compensation. The compensation amount is calculated as 70% of the difference between the profit guarantee and the actual pre-tax profit achieved.
Zen Tech confirmed that it has not yet received any compensation from Mr. Koh Chee Siong for Alpha’s failure to meet the profit guarantee for the financial period ended June 30, 2025. In response, Zen Tech stated it will consult its solicitors on the proposed action to be taken against Mr. Koh Chee Siong and/or Alpha regarding this matter.
Regarding Hiasset, the company is currently dormant. Its latest audited financial statement for the financial year ended December 31, 2024, showed a net loss of RM2,990 but net assets of RM4,988,080.
Zen Tech clarified that no liabilities, including contingent liabilities, will remain with Zen Tech following the completion of the Proposed Share Swap, save for the applicable stamp duty. Furthermore, Zen Tech has not provided any guarantees to either LKA or Alpha pursuant to the Proposed Share Swap. The company also stated there is no relationship between Mr. Koh Chee Siong and LKA.
