KUALA LUMPUR: BIG Industries Bhd plans to cancel 80 sen from the par value of each RM1 shares under its corporate exercise which includes a two-call rights issue of RM76.95 million in loan stocks.
It said on Wednesday, Dec 8 the cancellation of 80 sen from each shares would give rise to a credit of RM38.47 million which would be credited to the capital reserves account of the company.
'The proposed capital reduction will not result in any adjustment to the share price of the company or the number of shares held by shareholders,' it said.
BIG also proposed a renounceable two-call rights issue of up to RM76.94 million nominal value of 4% five-year irredeemable convertible unsecured loan stocks (ICULS) at 100% of the nominal amount of 20 sen each.
This would be on the basis of RM3.20 nominal value of ICULS (or 16 ICULS) for every two existing BIG shares held after the proposed capital reduction on an entitlement date to be determined and announced at a later date
On the rationale, it said BIG's shares had been trading below its par value of RM1 per share since February 2007. As at Dec 6, 2010, the closing price of BIG's shares was 33 sen, which is at a discount of 67% to the par value of BIG's shares.
'The current market price of BIG's shares is therefore not conducive for BIG to embark on any fund raising exercise and/or corporate exercises involving issuance of new shares. Accordingly, the proposed capital reduction will provide the company with greater flexibility to raise funds and to implement future corporate proposals which entail the issuance of new shares.
BIG also said the rights issue would enable the company to have substantial interest savings as the coupon rate for the ICULS of 4% per annum is lower than its existing average cost of borrowings of approximately 4.8% to 8.5% per annum.
It added the ICULS would enable the group to fix its cost of funds during the tenure of the ICULS thereby reducing the group's exposure to any fluctuation in interest rate.
It said on Wednesday, Dec 8 the cancellation of 80 sen from each shares would give rise to a credit of RM38.47 million which would be credited to the capital reserves account of the company.
'The proposed capital reduction will not result in any adjustment to the share price of the company or the number of shares held by shareholders,' it said.
BIG also proposed a renounceable two-call rights issue of up to RM76.94 million nominal value of 4% five-year irredeemable convertible unsecured loan stocks (ICULS) at 100% of the nominal amount of 20 sen each.
This would be on the basis of RM3.20 nominal value of ICULS (or 16 ICULS) for every two existing BIG shares held after the proposed capital reduction on an entitlement date to be determined and announced at a later date
On the rationale, it said BIG's shares had been trading below its par value of RM1 per share since February 2007. As at Dec 6, 2010, the closing price of BIG's shares was 33 sen, which is at a discount of 67% to the par value of BIG's shares.
'The current market price of BIG's shares is therefore not conducive for BIG to embark on any fund raising exercise and/or corporate exercises involving issuance of new shares. Accordingly, the proposed capital reduction will provide the company with greater flexibility to raise funds and to implement future corporate proposals which entail the issuance of new shares.
BIG also said the rights issue would enable the company to have substantial interest savings as the coupon rate for the ICULS of 4% per annum is lower than its existing average cost of borrowings of approximately 4.8% to 8.5% per annum.
It added the ICULS would enable the group to fix its cost of funds during the tenure of the ICULS thereby reducing the group's exposure to any fluctuation in interest rate.
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