Contents :
This announcement is dated 29 August 2000.
1. INTRODUCTION
On behalf of the Company, Arab-Malaysian Merchant Bank Berhad (“Arab-Malaysian”) wish to announce that the Company is proposing the following:-
i) A proposed bonus issue of up to 24,951,000 new ordinary shares of RM1.00 each ("Shares") in the Company on the basis of three (3) new Shares for every two (2) existing Shares held in the Company (“Proposed Bonus Issue”);
ii) A proposed rights issue of up to 8,317,000 new Shares at an indicative issue price of RM1.40 per new Share on the basis of one (1) new Share for every two (2) existing Shares held (“Proposed Rights Issue”); and
iii) Proposed Amendment to Bye-law 9 governing the Company’s employees’ share option scheme (“Proposed Amendment”). (The Proposed Bonus Issue, Proposed Rights Issue and Proposed Amendment are collectively known as “Proposals”)
2. THE PROPOSED BONUS ISSUE
2.1 Details of the Proposed Bonus Issue
The Company is proposing to undertake a bonus issue of up to 24,951,000 new Shares to be credited as fully paid-up on the basis of three (3) new Shares for every two (2) existing Shares held on an entitlement date to be determined at a later date.
The Proposed Bonus Issue will be fully capitalised from the share premium, revaluation reserve and unappropriated profits of KKB.
The actual number of new Shares to be issued pursuant to the Proposed Bonus Issue will be determined at an entitlement date in the future and is dependent upon the exercise, if any, of the outstanding options pursuant to the Employees’ Share Option Scheme (“ESOS”) of the Company.
2.2 Ranking of the New Shares
The new Shares to be issued pursuant to the Proposed Bonus Issue (“Bonus Shares”), shall not be entitled to the Proposed Rights Issue and shall upon on allotment and issue, rank pari passu in all respects with the existing Shares of the Company except that they shall not be entitled to any dividends, rights, allotments or other distributions which may be declared for any record date that is prior to the allotment date of the Bonus Shares.
2.3 Rationale of the Proposed Bonus Issue
The Proposed Bonus Issue together with the Proposed Rights Issue will enable the Company to comply with the minimum issued and paid-up share capital requirement of RM40,000,000 for a company listed on the Second Board of the Kuala Lumpur Stock Exchange (“KLSE”).
The Proposed Bonus Issue will also reward KKB’s existing shareholders for their continuous support of the Company and improve the marketability of the shares in the market.
3. THE PROPOSED RIGHTS ISSUE
3.1 Details of the Proposed Rights Issue
The Company is also proposing a renounceable rights issue of up to 8,317,000 new Shares at an indicative issue price RM1.40 per new Share on the basis of one (1) new Share for every two (2) existing Shares held. The issue price of the new shares to be issued pursuant to the Proposed Rights Issue (“Rights Shares”) is payable in full upon acceptance.
The actual number of new Shares to be issued pursuant to the Proposed Rights Issue can only be determined at an entitlement date in the future and is dependent upon the exercise, if any, of the options outstanding under the ESOS on or prior to the allotment date.
3.2 Ranking of the Rights Shares
The Rights Shares shall not be entitled to the Proposed Bonus Issue and shall upon allotment and issue, rank pari passu in all respects with the existing Shares of the Company except that they shall not be entitled to any dividends, rights, allotments or other distributions which may be declared for any record date that is prior to the allotment date of the Rights Shares.
3.3 Utilisation of Proceeds
The gross proceeds from the Proposed Rights Issue of up to approximately RM11.6 million (assuming an indicative issue price of RM1.40 per new Share) is to be utilised as set out in Table 1.
3.4 Rationale of the Proposed Rights Issue
The Proposed Rights Issue will enable the Group to raise funds for working capital for the commissioning of the Group’s new steel pipes manufacturing plant and to finance the upgrading of its existing LPG cylinder plant, both located in Kuching. The steel pipes manufacturing plant is the crystallisation of the Group’s upstream expansion strategy. When commissioned by end 2000, the Group’s new steel pipes manufacturing plant will be the first such plant in Sarawak, and is positioned to participate in the water distribution infrastructure development of the state.
The Proposed Rights Issue together with the Proposed Bonus Issue will enable the Company to comply with the minimum issued and paid-up share capital requirement of RM40,000,000 for a company listed on the Second Board of the KLSE. In addition to that, the Proposed Rights Issue will provide an opportunity for KKB’s existing shareholders to further participate in the equity of the Company.
3.5 Basis of Arriving at the Proposed Rights Issue Price
The issue price of RM1.40 for the Proposed Rights Issue is indicative at this stage and is based on a discount of approximately 24.2% on the theoretical ex-all price of RM1.847 based on the weighted average market price of KKB shares for the five (5) market days ended 28 August 2000 of RM4.843. The final issue price will be determined on a price-fixing date after the receipt of approval from the relevant authorities.
3.6 Underwriting of the Rights Shares
Arrangements will be made by Arab-Malaysian for the Rights Shares, excluding the Rights Shares which are undertaken to be subscribed by major shareholders, to be underwritten.
4. PROPOSED AMENDMENT
4.1 Details of the Proposed Amendment
The Securities Commission (“SC”) has allowed the exercise price of options offered under employee share option schemes to be set at a discount of not more than 10% on the five (5) day weighted average market price of the underlying shares at the date of the offer. Hence, the Company is proposing to amend the bye-laws of its ESOS in respect of Clause 9 which relates to option price to provide for this flexibility.
4.2 Rationale of the Proposed Amendments
The establishment of the ESOS serves to reward eligible employees of KKB and its subsidiary companies whose services are considered vital to the operations and continued growth of the Group.
In addition, the granting of options under the ESOS would further motivate them towards better performance through greater dedication and loyalty with a view to enhance productivity.
In line with these objectives, the Proposed Amendment will allow the eligible employees to benefit from the discount given upon subscription of the shares of the Company and further encourage these employees to continue contributing to the well-being of the respective companies in the KKB Group.
5. SUMMARY OF FINANCIAL EFFECTS OF THE PROPOSED BONUS ISSUE AND PROPOSED RIGHTS ISSUE
The following are the summary of the effects of the Proposed Bonus Issue and Proposed Rights Issue (the Proposed Amendments will not have any effects):-
5.1 Share Capital
The share capital of the Company will be increased after the completion of the Proposed Bonus Issue and Proposed Rights issue as set out in Table 2.
5.2 Earnings
The Proposed Bonus Issue will not have any effect on the earnings of KKB Group except for the proportionate reduction in the Group’s earnings per share as a result of the increase in the issued and paid-up share capital of the Company. The Proposed Rights Issue is expected to enhance the earnings capability of the Group as a result of improved efficiency of the LPG cylinder plant upon completion of the upgrade. In addition, the earnings of the Group is also expected to be improved upon the crystallisation of the contribution from the proceeds to be used as working capital for the Group’s new steel pipes manufacturing plant.
5.3 Net Tangible Assets (“NTA”)
The proforma effects of the Proposed Bonus Issue and Proposed Rights Issue on the NTA of the Group based on the audited balance sheet as at 31 December 1999 is shown in Table 3.
6. APPROVALS REQUIRED
The Proposals are subject to the following approvals:-
(a) the SC;
(b) the shareholders of KKB at an Extraordinary General Meeting to be convened;
(c) the KLSE for the listing and quotation of the new ordinary shares to be issued pursuant to the Proposed Bonus Issue and Proposed Rights Issue; and
(d) any other relevant authorities.
7. DIRECTORS’ RECOMMENDATION
After taking into consideration the rationale for the Proposals, the Directors of KKB, are of the opinion that the Proposals are in the long term interest of the Group.
8. DIRECTORS’ AND/OR SUBSTANTIAL SHAREHOLDERS’ INTERESTS
None of the Directors and/or substantial shareholders and/or persons connected to Directors and/or substantial shareholders of KKB have any interest, either direct or indirect, in the Proposals beyond their entitlement under the Proposed Bonus Issue and Proposed Rights Issue for which all existing shareholders of KKB are entitled.
9. APPLICATION TO THE RELEVANT AUTHORITIES
Application to the relevant authorities for the Proposals are expected to be submitted within three (3) months from the date of this announcement.
TABLE 1
 |
Notes
|
RM million
|
|
|
|
| Upgrading of Liquefied Petroleum Gas (“LPG”) cylinder plant |
(a)
|
6.10
|
| Working capital for the new steel pipes manufacturing plant |
(b)
|
4.70
|
| Estimated expenses of the Proposals |
|
0.80
|
|
TOTAL
|
|
11.60
|
Notes:- (a) Approximately RM6.1 million will be used to upgrade the Group’s existing LPG cylinder plant in Kuching. (b) During 2000, the Group is investing in a new steel pipes manufacturing plant in Kuching which will cost approximately RM11.0 million to construct. Approximately RM4.7 million from the proceeds of the Proposed Rights Issue will be used as working capital for the operations of this new plant.
TABLE 2
|
Assuming no additional options pursuant to the ESOS are exercised *
|
|
Assuming the options pursuant to the ESOS are fully exercised #
|
|
|
|
|
| As at 21 July 2000 |
15,549,000
|
|
15,549,000
|
|
|
|
|
| Add:- |
|
|
|
|
|
|
|
| To be issued pursuant to the exercise of the ESOS options which have been granted and which remain unexercised |
-
|
|
796,000
|
|
|
|
|
| To be issued pursuant to the exercise of the ESOS options which may be additionally granted pursuant to the ESOS |
-
|
|
289,000
|
|
Total
|
15,549,000
|
|
16,634,000
|
| To be issued pursuant to the Proposed Bonus Issue |
23,323,500
|
|
24,951,000
|
| To be issued pursuant to the Proposed Rights Issue |
7,774,500
|
|
8,317,000
|
| Enlarged share capital after the Proposed Bonus Issue |
46,647,000
|
|
49,902,000
|
* Assuming no additional options granted pursuant to the ESOS are exercised on or prior to the entitlement date of the Proposed Bonus Issue
# Assuming all options granted and/or to be granted pursuant to the Company’s ESOS will be exercised
TABLE 3
|
|
|
Assuming no exercise of 1,085,000 additional options pursuant to the ESOS
|
Assuming 1,085,000 additional options# pursuant to the ESOS are fully exercised
|
|
(1)
|
(2)
|
(3)@
|
(4)
|
(5)*
|
(6)
|
|
RM
|
RM
|
RM
|
RM
|
RM
|
RM
|
|
|
|
|
|
|
|
| Share Capital |
15,051,000
|
15,549,000
|
38,872,500
|
46,647,000
|
41,585,000
|
49,902,000
|
| Share Premium |
32,739
|
^946,837
|
-
|
*!2,309,800
|
1,468,140
|
!3,989,940
|
| Revaluation Reserve |
11,989,017
|
11,989,017
|
6,522,885
|
6,522,885
|
6,522,885
|
6,522,885
|
| Unappropriated Profits |
27,968,494
|
27,968,494
|
11,057,963
|
11,057,963
|
11,057,963
|
11,057,963
|
| NTA |
55,041,250
|
56,453,348
|
56,453,348
|
66,537,648
|
60,633,988
|
71,472,788
|
|
|
|
|
|
|
|
| NTA per share (RM) |
3.66
|
3.63
|
1.45
|
1.43
|
1.46
|
1.43
|
(1) Audited accounts as at 31.12.1999 (2) After incorporating the effects of 498,000 options exercised between 1.1.2000 to 22.7.2000 (3) After (2) and the Proposed Bonus Issue (4) After (2), (3) and the Proposed Rights Issue (5) After (2), the effects of the exercise of an additional 1,085,000 options pursuant to the ESOS and the Proposed Bonus Issue (6) After (2), (5) and the Proposed Rights Issue ^ 485,000 options exercised at the subscription price of RM2.82 per ordinary share and 13,000 exercised at the subscription price of RM3.46 per ordinary share # 166,000 options to be exercised at the subscription price of RM5.60 per share 289,000 options to be exercised at the subscription price of RM5.00 per share (assumed to be additionally granted at RM5.00) 46,000 options to be exercised at the subscription price of RM3.46 per share 584,000 options to be exercised at the subscription price of RM2.82 per share @ After capitalisation of RM946,837 from the share premium account, RM5,466,132 from the revaluation reserve account and RM16,910,531 from the unappropriated profit account * After capitalisation of RM2,574,337 from the share premium account, RM5,466,132 from the revaluation reserve account and RM16,910,531 from the unappropriated profit account *! Assuming the Proposed Rights Issue price is RM1.40 and after deducting estimated expenses of RM800,000 ! Assuming the Proposed Rights Issue price is RM1.40 and after deducting estimated expenses of RM805,000
