KUALA LUMPUR (Oct 28): DPS Resources Bhd, a manufacturer of rubber wood furniture and roof trusses, has proposed to undertake a renounceable rights issue with free warrants to raise between RM28.1 million and RM38.68 million to fully repay advances amounting to RM10 million from its executive chairman Datuk Seri (Dr) Sow Chin Chuan to the group, which had been fully utilised to partially fund the acquisitions of land in 2021, as well as for working capital.

It is also planning a share consolidation exercise by consolidating every five existing shares in the company into one share.

In a bourse filing on Friday (Oct 28), DPS said the rights issue with warrants entails the issuance of up to 89.96 million new shares on the basis of one rights share for every two shares held on an entitlement date to be determined later.

The rights issue comes together with up to 71.97 million free detachable warrants C on the basis of four Warrants C for every five rights shares subscribed.

It is also seeking exemption for Sow and persons acting in concert with him, from the obligation to undertake a mandatory offer for the remaining shares and convertible securities in DPS not held by them upon completion of the proposed rights issue.

Based on an illustrative price of 43 sen per rights share — a discount of 2.09% to the theoretical ex-all price of 43.92 sen — DPS expects to raise a minimum of RM28.1 million and up to RM38.68 million from the proposed rights issue.

To meet the minimum subscription level, the company has procured undertakings from Sow and his wife Datin Seri Chu Kim Guek, who is an executive director of DPS, to subscribe in full their entitlement. As at Oct 21, 2022, the couple owned 32.6% of DPS shares.

"DPS Group undertakes property development projects in Melaka. It intends to use part of the proceeds for a future property development project named Taman Bukit Rambai Putra (Phase 3), whose gross development value is estimated at RM51.5 million," said DPS.

TA Securities Holdings Bhd has been appointed as the adviser for the proposals, which are expected to be completed within six months from the date of approval from Bursa Securities.

DPS shares closed down 0.5 sen or 5% at 10 sen on Friday, bringing the company a market capitalisation of RM74.06 million.