PETALING JAYA: K-Star Sports Ltd has proposed a special issue of not more than 50% of its issued share capital to independent third party investor(s) to raise RM22.73 million based on the indicative issue price of 10.2 sen, as well as an internal reorganisation to facilitate the transfer of its current listing status from the Singaporean entity back to a Malaysian entity.
The proposed special issue is expected to be completed prior to the implementation of the proposed internal reorganisation.
The proceeds will be used for general working capital, working capital of construction segment, and the acquisition of machinery and equipment for its construction segment.
“The board has considered various methods of fund raising and is of the opinion that the proposed special issue is the most appropriate avenue of fund raising for K-Star to raise additional funds expeditiously, without incurring financing costs associated with bank borrowings,“ K-Star said in a stock exchange filing.
The exercise is expected to result in an immediate dilution to earnings per share/loss per share of K-Star group as a result of the increase in the number of K-Star shares.
As the proceeds is allocated for business purposes (working capital or capital expenditure), the board expects the proposed special issue to contribute positively to the future earnings of the group as and when the benefits of the proceeds are realised.
Meanwhile, its proposed internal reorganisation includes the proposed exchange of all existing K-Star shares with new shares in a new investment holding company, namely Bluesky Capital Sdn Bhd (Newco) on a one-for-one basis; and all outstanding warrants 2018/2021 with new warrants to be issued by Newco on a one-for-one basis; the proposed transfer of listing K-Star’s listing status to Newco and the proposed transfer of K-Star’s entire shareholdings in its wholly-owned subsidiary Sinaran Trilion Sdn Bhd to Newco.
K-Star, which is currently listed on Bursa Malaysia’s Main Market, is a Singapore entity. As such, K-Star is required to comply with the relevant laws and regulations in two jurisdictions (Singapore and Malaysia).
“The proposed internal reorganisation is intended as an internal corporate restructuring exercise for K-Star group to facilitate the transfer of its current listing status from the Singaporean entity back to a Malaysian entity,“ it said.
The proposed internal reorganisation will streamline the regulatory compliance obligation of the listed issuer which is expected to reduce the corporate compliance cost (audit expenses and secretarial fees).
The proposals are subject to the approval of Bursa Malaysia Securities and shareholders of K-Star at an EGM to be convened.
Barring unforeseen circumstances, the proposals are expected to be completed by the fourth quarter of 2020.