KUCHING: Serba Dinamik Holdings Bhd (SDHB) has proposed a bonus issue and issuance of free warrants to reward its shareholders.
The company also proposes a share split involving a subdivision of every two existing ordinary shares into thee shares (subdivided shares).
The bonus issue of 881.1 million shares is on the basis of two bonus shares for every five subdivided shares at an entitlement date to be determined later, SDHB said in a filing with Bursa Malaysia.
The company has proposed to also issue 888.1 million free warrants on the basis of two warrants for every five subdivided shares.
“The proposals will be carried out concurrently and the bonus shares to be received by all entitled shareholders of SDHB whose names appear in the Record of Depositors of SDHB at the close of business day on the entitlement date (entitled shareholders) shall be in the form of subdivided shares while the number of warrants to be received by the entitled shareholders shall be based on the number of subdivided shares held by the entitled shareholders after the proposed share split but before the proposed bonus issue of shares,” it added.
Based on the number of SDHB shares in issue,the resultant issued number of SDHB shares upon completion of the proposed share split will be RM1,344,347,000 comprising 2,202,750,000 subdivided shares.
“The bonus shares will be issued as fully paid,at no consideration and without capitalisation on the company’s reserves.
“For the avoidance of doubt, the proposed bonus issue of share will increase the number of SDHB shares in issue but will not increase the value of share capital of SDHB,” said the company.
On the free warrants to be issued, SDHB said their exercise price would be determined at a later date by the board of directors after the receipt of all relevant approvals but before the announcement of the entitlement date.
For illustration purposes, the exercise price of the warrants is assumed at RM2.56 per SDHB share, being a premium of approximately 30 percent over the theoretical ex-all price of RM1.97 calculated on the closing price of SDHB shares of RM4.15 on the date of announcement of the proposals.
The warrants have a tenure of five years.
“For illustration purposes, assuming that all warrant holders exercise their warrants at the exercise price of RM2.56 per SDHB shares, the maximium proceeds to be received by the company will amount to approximately RM2,255,616,000.
“Such proceeds to be raised,as and when the warrants are exercised, shall be utilised for (i) working capital of the group, which may include payment of trade and other payables, employee costs and marketing and administrative expenses,and (ii) repayment of bank borrowings.
As at December 31, 2018,SDHB has total borrowings of about RM1.71 billion or gross gearing of 0.82 times.
“The proceeds to be utilised for each component of working capital are subject to the group’s operating requirements
at the time of utilisation and, therefore, cannot be determined at this juncture,” said SDHB.
On the rationale for the proposals, the company said the share split and bonus issue are expected to further enhance the marketability and trading liquidity of SDHB shares on the Main Market of Bursa Securities as a result of the increase in the number of shares in issue.
It will result in an adjustment to the market price of SDHB shares which lead to it being more affordable, thus potentially appealing to a wider group of public shareholders and/or investors to participate in the growth of the company.
Besides, the company said the proposed bonus issue and free warrants is being implemented to reward the existing shareholders for their loyalty and continuous support to the group.
Subject to all requisite approvals being obtained,SDHB said the proposals are expected to be completed by fourth quarter 2019 (4Q2019).
