PETALING JAYA: Guan Chong Bhd is proposing a bonus issue of up to 527.94 million shares on the basis of one bonus share for every one existing share.
It also plans to issue up to 175.98 million free warrants on the basis of one warrant for every three existing shares to raise a minimum of RM262.79 million.
It said the proposed bonus issue of shares provides the shareholders of the company with greater participation in the equity of the company in terms of number of shares held and maintaining their percentage equity interest.
“In addition, the exercise is to reward the shareholders for their continuous support by enabling them to participate in the equity of the company without incurring any cost and will possibly be able to encourage trading liquidity of Guan Chong’s shares on Bursa Securities.”
For the free warrants issue, assuming the full exercise of the warrants at the exercise price of RM1.65 per warrant, Guan Chong is expected to raise up to RM290.37 million.
“The proceeds to be raised by the company, as and when the warrants are exercised, are expected to strengthen the company’s capital base and shareholders’ funds as well as potentially provide funds for the group to finance its working capital without incurring interest cost, as compared to bank borrowings.”
The proposals are not expected to have any material effect on the earnings of the group for the financial year ending Dec 31, 2019, save for the dilution in the earnings per share as a result of the increase in the number of shares in issue, and as and when the warrants are exercised into new shares.
The proposals are expected to be completed in the fourth quarter of 2019.
