(1) Proposed Bonus Issue Of Up To 31,204,514 New Ordinary Shares Of Rm1.00 Each On The Basis Of One (1) New Ordinary Share For Every Four (4) Existing Ordinary Shares Held In RPB On A Date To Be Determined Later ("Proposed Bonus Issue"); And (2) Proposed rRghts Issue Of Up To 62,409,028 New Ordinary Shares Of Rm1.00 Each Together With Up To 31,204,514 Free Detachable Warrants At A Proposed Rights Issue Price of Rm1.00 Per Share On The Basis Of Two (2) New Ordinary Shares With One (1) Detachable Warrant For Every Four (4) Existing Ordinary Shares Held In RPB On A Date To Be Determined Later ("Proposed Rights Issue With Warrants").
| General Announcement Reference No MM-990827-64885 |
| Submitting Merchant Bank | : | ARAB-MALAYSIAN MERCHANT BANK BERHAD |
| Company Name | : | RELIANCE PACIFIC BERHAD |
| Stock Name | : | RPB |
| Date Announced | : | 30/08/1999 |
 |
|
|
| Type | : | Announcement |
| Subject | : | (1) PROPOSED BONUS ISSUE OF UP TO 31,204,514 NEW ORDINARY SHARES OF RM1.00 EACH ON THE BASIS OF ONE (1) NEW ORDINARY SHARE FOR EVERY FOUR (4) EXISTING ORDINARY SHARES HELD IN RPB ON A DATE TO BE DETERMINED LATER ("PROPOSED BONUS ISSUE"); AND (2) PROPOSED RIGHTS ISSUE OF UP TO 62,409,028 NEW ORDINARY SHARES OF RM1.00 EACH TOGETHER WITH UP TO 31,204,514 FREE DETACHABLE WARRANTS AT A PROPOSED RIGHTS ISSUE PRICE OF RM1.00 PER SHARE ON THE BASIS OF TWO (2) NEW ORDINARY SHARES WITH ONE (1) DETACHABLE WARRANT FOR EVERY FOUR (4) EXISTING ORDINARY SHARES HELD IN RPB ON A DATE TO BE DETERMINED LATER ("PROPOSED RIGHTS ISSUE WITH WARRANTS"). |
Contents :
1. INTRODUCTION
i. Proposed Bonus Issue; and
ii. Proposed Rights Issue with Warrants.
(Collectively known as the "Proposals")
2.1 Details of the Proposed Bonus Issue
i. Information On The Proposed Bonus Issue
The Company is proposing to implement a bonus issue of up to 31,204,514 new ordinary shares of RM1.00 each to the entitled shareholders on the basis of one (1) new ordinary share for every four (4) existing ordinary shares held to be credited as fully paid-up shares of RPB. The Proposed Bonus Issue will be capitalised entirely from the share premium reserve of the Company amounting to RM62.9 million as at 31 March 1998.
ii. Ranking of the Bonus Shares
The new Bonus Shares shall upon allotment and issue, rank pari passu in all respects with the existing shares of the Company except that they will not be entitled to any dividends or other form of distributions which may be declared, made or paid in respect of the financial year ending 31 March 2000 or any dividend or any other form of distributions that may be declared before the allotment of the said Bonus Shares.
iii. Rationale for the Proposed Bonus Issue
The Proposed Bonus Issue will increase the share capital base of the Company to a level which will better reflect the Company's current scale of operations. The Proposed Bonus Issue will also reward the shareholders for their continuous support to the Group. At the same time, the increase in the number of shares in issue is expected to improve the liquidity of RPB shares in the market.
The Proposed Rights Issue with Warrants will entail the issue of up to 62,409,028 new ordinary shares of RM1.00 each together with up to 31,204,514 free detachable Warrants at a proposed rights issue price of RM1.00 per share on the basis of two (2) new ordinary shares with one (1) detachable Warrant for every four (4) existing ordinary shares held on a book closure date to be determined later by the Board.
The new Bonus Shares to be issued pursuant to the Proposed Bonus Issue are not entitled to participate in the Proposed Rights Issue with Warrants.
The issue of the Warrants to each of the entitled shareholders of RPB will be based on the shareholders entitlements to the Proposed Rights Issue with Warrants and on his acceptance of his rights entitlement. Should the shareholder renounce his entitlement to the Proposed Rights Issue with Warrants, he will not be entitled to the Warrants.
ii. Ranking of the Rights Shares
The new shares to be issued pursuant to the Proposed Rights with Warrants Issue shall upon allotment and issue, rank pari passu in all respects with the existing shares of the Company except that they will not be entitled to any dividend or other form of distributions which may be declared, made or paid in respect of the financial year ending 31 March 2000 or any dividend or any other form of distributions that may be declared before the allotment of the shares pursuant to the Proposed Rights Issue with Warrants.
iii. Principal Terms of the Warrants
The principal terms of the Warrants are set out in Table 1.
iv. Basis for Determining the Rights Issue Price
The proposed rights issue price of RM1.00 was arrived at based on a discount of about 16% over the theoretical ex-all price which was determined based on the lower of the current or the 3-month weighted average market price of RPBshares up to 27 August1999of RM1.71and RM1.59 respectively. The quantum of the said discount would be about 33% if the intrinsic value of the Warrants to be issued free with the Rights Shares are taken into consideration.
v. Proposed Utilisation of the Proceeds from the Proposed Rights Issue with Warrants
Assuming none of the Warrant holders exercise their Warrants and all the treasury shares as disclosed in Section 3 below were resold in the market prior to the entitlement date for the Proposed Rights Issue with Warrants, the Proposed Rights Issue with Warrants is expected to raise about RM49,060,100 to be utilised principally to redeem the outstanding bonds due in April 2000 of RM45 million. Further details are shown in Table 2.
vi. Underwriting for the Proposed Rights Issue with Warrants
Apart from the Rights Shares to be undertaken to be subscribed by certain shareholders, arrangements will be made for the remaining right shares to be fully underwritten.
vii. Rationale of the Proposed Rights Issue with Warrants
The Board has proposed the Proposed Rights Issue with Warrants as it represents a cost effective method to raise the much required funds for the RPB Group. Equity financing will also strengthen the capital base of the Group as compared to obtaining additional external borrowings.
The rationale for the issuance of detachable Warrants together with the proposed rights issue of new ordinary shares is as follows:
(ii) as an avenue for the Company to raise additional equity funds in the future when the warrant holders convert their Warrants into RPB shares; and
(iii) to provide the shareholders of RPB with an opportunity to further their increase equity participation in the Company in the future.
As at 27 August 1999, there are 26,697,855 outstanding RPB Warrants at an exercise price of RM2.55. The financial effects below have been illustrated assuming the outstanding RPB Warrants were not exercised prior to the entitlement date(s) for the Proposed Rights Issue with Warrants and the Proposed Bonus Issue. In addition, it is also assumed that the treasury shares as disclosed in Section 3.1 below are not resold in the market prior to the abovementioned entitlement date.
3.1 Share Capital
The Proposals will increase the issued and paid up share capital of RPB as set out in Table 3.
3.2 Earnings
The Proposals are expected to be completed towards the end of the financial year ending 31 March 2000. Therefore, depending on the timing of the completion of the Proposals, the Proposals are not expected to significantly improve the earnings of the RPB Group for the current financial year ending 31 March 2000. However, the long term profitability of the RPB Group is expected to be enhanced by the Proposals.
3.3 NTA
On proforma basis, the audited consolidated NTA per share of RPB as at 31 March 1998 of RM1.97 is expected to decrease to RM1.42 pursuant to the Proposals. This is due to the proposed rights issue price at par which is lower than its current NTA value per share and the dilutive effect from the Proposed Bonus Issue.
3.4 Dividend
The Board has recommended dividend of 4% for the financial year ended 31 March 1999. Barring any unforeseen circumstances, the Board expects to be able to maintain the same rate of dividend for the financial year ending 31 March 2000.
i) SC;
ii) Shareholders of RPB at an extraordinary general meeting ("EGM") to be convened for the Proposals;
iii) the Ministry of Finance for an exemption under Section 365 of the Companies Act, 1965 for the Proposed Bonus Issue;
iv) KLSE for the listing of and quotation for the new RPB shares and Warrants to be issued pursuant to the Proposals; and v) Any other relevant authorities.
5. DIRECTORS' AND SUBSTANTIAL SHAREHOLDERS' INTEREST
None of the directors and/or substantial shareholders of RPB and/or persons connected with the directors and/or substantial shareholders of RPB have any interest, direct or indirect, in the Proposals beyond their entitlements under the Proposed Bonus Issue and Proposed Rights Issue with Warrants, of which all existing shareholders of RPB are entitled to.
6. DIRECTORS' OPINION
The Board of Directors of RPB is of the opinion that the Proposals are in the interest of RPB to undertake as it will address the short term financial requirements of the Company.
7. APPOINTMENT OF ADVISER
The Board has appointed Arab-Malaysian as the Adviser for the Proposals. The Board has sought the advice of Arab-Malaysian prior to making this announcement.
8. SUBMISSION TO THE SC
A submission to the SC on the Proposals is expected to be made within three (3) months from the date of announcement.
TABLE 1
TABLE 2
TABLE 3
Bursa Announcement
