Tuesday 19 Mar 2024
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KUALA LUMPUR: Shareholders of GW Plastics Holdings Bhd (fundamental score: 1.2; valuation score: 0.3) will be rewarded with a final dividend before the company completes the reverse takeover exercise (RTO) by property developer MCT Consortium Bhd (MCT) in the second quarter of 2015 (2Q15).

“We still have some cash, which we will distribute by way of dividends to existing shareholders. It is to ensure that existing shareholders are taken care of. We have not fixed the date yet but it will be done before the completion of the [RTO] exercise,” GW Plastics chief executive officer Lim Kok Boon told newsmen after the company’s extraordinary general meeting (EGM) yesterday.

Lim said the amount to be distributed is yet to be determined. As at Sept 30, 2014, the former plastics manufacturer’s net cash position was RM5.31 million.

Upon the completion of the RTO, GW Plastics will emerge as a property development firm and be renamed MCT Bhd.

Lim assured existing shareholders that they will not get the short end of the stick in the RTO bargain as the board will keep the interests of its shareholders as the cornerstone in the deal.

“We have explained to them [minority shareholders] ... this exercise will add value to their shares,” said Lim.

GW Plastics fell into Practice Note 17 (PN17) status in January last year following the disposal of its core assets — Great Wall Plastic Industries Bhd and GW Packaging Sdn Bhd — to Scientex Bhd for RM283.2 million in 2012.

At the beginning of 2014, news broke that GW Plastics had proposed to acquire the entire shares of property development firm MCT Consortium Bhd through a RTO for RM1.21 billion.

The proposed RTO by MCT will see GW issue 1.08 billion new GW Plastics shares as well as RM135.16 million worth of 30-month zero coupon irredeemable convertible unsecured loan stocks.

Under GW Plastics’ regularisation plan and the RTO exercise, existing GW Plastics shareholders will gain three free shares for every two new shares they hold.

Lim said the regularisation plan also provides for a restricted offer for sale on a disproportionate basis to ensure that it favours minority shareholders.

“When we consolidated our [issued and paid-up capital of 235.6 million ordinary] shares of one sen each to [2.36 million ordinary shares of] RM1 each, minority shareholders ended up with a very small amount of shares.

“So, for the restricted offer for sale, we have actually done it in a way where we have a non-proportionate allocation. Minority shareholders will get a relatively bigger portion and this will favour them,” Lim said.

He said GW Plastics is on track to complete its corporate revamp under the RTO and that there are no “major roadblocks” after GW Plastics shareholders gave their approval at the EGM yesterday.

Lim said the company will now have to make applications to relevant authorities for the issuance of its new shares. Meanwhile, MCT will have to undergo an internal reorganisation.

“It is now mostly procedural. The moment the transaction is completed and the new shares are listed, we are technically no longer a PN17 company. That will happen some time in 2Q15,” said Lim.

 

This article first appeared in The Edge Financial Daily, on January 16, 2015.

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