Hwang Capital asked to consider selective capital reduction, repayment

PETALING JAYA: Hwang Capital (Malaysia) Bhd’s majority shareholder Hwang Enterprises Sdn Bhd is asking the company to pay out RM260.68 million to shareholders as part of a selective capital reduction and repayment exercise which will see Hwang Enterprises take Hwang Capital private.

In a letter filed with Bursa Malaysia, Hwang Enterprises and Hwang Lip Teik (major shareholder and non-executive chairman of Hwang Capital) said the exercise is a continuation of a voluntary general office last year, which only managed to increase their stake in Hwang Capital to 65.25%, and the public shareholding spread fall to 7.08%, below the required 10% threshold. Trading in Hwang Capital shares has been suspended since September 2016.

The exercise values Hwang Capital shares at RM2.94 apiece.
Hwang Enterprises and Lip Teik painted a gloomy picture of the company’s prospects, stating that net interest income and fee-based income have decreased and risks inherent in the money-lending business of Hwang Capital are likely to rise, with higher household debt and the potential for financing arrears and therefore higher provisions for losses on loans.

Hwang Capital’s net profit fell 6% year-on-year to RM25.9 million for the nine-month period ended April 30, 2017, on a 13% drop in revenue to RM41.8 million.

Hwang Enterprises and Lip Teik said the exercise offers a final opportunity to shareholders to realise the value of their shares which have been untradeable. The board has until July 31 to decide whether to put the proposal to shareholders.