We refer to your Company's Reply to Query dated 10 November 2022 (“Reply”) in respect of the announcement dated 7 November 2022 on the aforesaid matter. In this connection, kindly furnish Bursa Malaysia Securities Berhad ("Bursa Securities") with the following additional information for public release:- 1) Section 2.1 a) To provide the name of shareholder(s) in Harvest Star Center Limited up to the level of ultimate individual shareholder(s). b) To clarify whether any valuation by an independent party was undertaken to determine the cost/ value of the Assets and to provide the relevant details, if applicable. If no valuation was undertaken, please provide the detailed breakdown in deriving at the amount of financial assistance provided to SSN which led to the transfer of ownership of the Assets. c) To explain the rationale for SSN to lease back the 2 new gloves production lines given that there is no actual production as at to-date due to insufficient sales order. d) To clarify whether SSN is still required to pay the monthly lease payment for the Assets even if no actual production commenced and who will bear the maintenance and/or repair cost to be incurred for the 2 gloves production lines throughout the 3-year lease period. e) To provide the salient terms on lessor’s right to terminate the Lease in the event of default of SSN and to state the recourse available. f) With respect to the statement which reads “The Company will take all reasonable steps that are within its control to collect the Lease Payment from SSN”, please provide greater granularity on ‘reasonable steps’ by spelling out clearly the practical actions that can be taken by VIP/Vizione and also explain why couldn’t the same ‘reasonable steps’ be taken by VIP/Vizione in recovering the financial assistance provided to SSN. g) As Vizione is disposing off its 51% equity interest in SSN, please justify the rationale and reasonableness for VIP/Vizione to own the 2 gloves production lines or Assets which are housed in the premise/building of SSN. To also explain the control mechanism put in place by VIP/Vizione to ensure that the Assets are intact and not subject to any misuse/misappropriation by a third party and VIP/Vizione can have full access in controlling the Assets. Please comment and provide the board of directors’ view (together with bases and justification) on whether the Proposed Disposal and the lease arrangement are carried out in the best interest of Vizione Group and the practicality of these deals. h) If the Assets have been fixed in the factory of SSN, please comment on the likelihood for Vizione to sell them to another buyer. Please elaborate on the arrangement agreed with SSN on this matter to ensure that Vizione’s interest is well protected to avoid any unintended consequences e.g. the risk of not being able to access the premise/building where the Assets are located. i) Based on the details set out in the table provided under item (k) of Vizione’s Reply, please clarify if there was any cost overrun encountered in SSN’s expansion given that RM14 million was originally planned for acquisition, installation and commission of 6 new nitrile gloves production lines but only 2 new production lines are ready for commercial production with a total cost of RM10.395 million incurred to-date. The same goes for the RM1 million earmarked for installation and upgrading works on the waste treatment system to treat the wastewater arising from the manufacturing process and heating system and RM0.709 million has been incurred although only 2 out of the 6 production lines are ready for commercial production. j) With respect to the computation of the Liquidated Damages, please clarify if the formula used is in the best interest of Vizione and not detrimental to the Company as the computed amount of RM1,578,245.12 is lower than the amount of RM2,414,714.85 if the following formula is adopted: (Difference between the amount of Profit Guarantee and the actual PBT achieved) x 51% equity interest in SSN held by Vizione) k) Given the financial standing of SSN with net liability position, poor financial performance for the past 10 months and uncertain future cashflow due to the gloomy outlook for the rubber gloves industry for the foreseeable future which led to SCA’s opinion that the valuation of SSN as at the Valuation Date to be a nominal value of RM2. Please clarify if there is an opinion on going concern and/or other qualifications expressed by the external auditor of SSN with respect to the company financial performance/ position. 2) Section 7 “The transfer of ownership of the Assets” to contra the amount due and owing by SSN to VIP in relations to the financial assistance, shall be construed as a new “Transaction” pursuant to Chapter 10 of the LR. In this regard, please provide the computation of the applicable percentage ratio in respect of the “Transfer of ownership of the Assets” and make the requisite information as prescribed in the LR. Please furnish Bursa Securities with your reply within one (1) market day from the date hereof. Yours faithfully,
Listing Regulation
Cc : Market Surveillance Dept., Securities Commission |