PETALING JAYA: Ni Hsin Resources Bhd has proposed a diversification of its existing businesses to the food and beverage (F&B) industry and has proposed a rights issue of redeemable convertible preference shares (RCPS) to raise up to RM9.6 million.
Currently, Ni Hsin is involved in the business of design, manufacture and sale of stainless steel kitchenware and cookware, manufacture and sale of stainless steel convex mirrors, and research, development and manufacture of clad metals.
It proposed a renounceable rights issue of up to 960.1 million RCPS at an issue price of 1 sen per RCPS on the basis of two RCPS for every existing share in Ni Hsin held by entitled shareholders.
As at July 15, 2020, the company has 321.75 million shares (including 10.22 million treasury shares) and 158.3 million outstanding warrants 2019/2022 which are exercisable into 158.3 million shares.
The proposed rights issue of RCPS is intended to be undertaken on a minimum subscription basis and will entail the issuance of 300 million RCPS.
To meet the minimum subscription level, Ni Hsin has obtained an irrevocable written undertaking from Ni Hsin major shareholder/key management Khoo Chee Kong to subscribe and/or procure the subscription of 300 million RCPS.
At a minimum and a maximum scenario, the proposed rights issue of RCPS will raise RM3 million and RM9.6 million respectively.
On the business diversification, Ni Hsin said the proposed diversification enables the company to venture into other revenue-generating business as a way mitigate the risk of overdependence on its existing core businesses.
“The company’s cookware business and clad metals business has been incurring operating losses for the financial year ended Dec 31, 2018 and FY 2019, as a result of competition from overseas competitors, turbulent global market condition and on-going trade war between US and China, which has impacted global business sentiments,” Ni Hsin said in a statement.
The additional revenue contribution from the proposed diversification is expected to enhance the future profitability of Ni Hsin and returns on its shareholders’ funds.
The company has yet to commence the F&B business and is currently in advanced negotiations on potential collaboration with strategic partners currently involved in the F&B Business.
The new F&B business will be spearheaded by Khoo, who has years of relevant experience in F&B business.
