KUALA LUMPUR (June 1): Hiap Teck Venture Bhd (Hiap Teck) plans to raise up to RM213.72 million for working capital via the issuance of 5% redeemable convertible unsecured Islamic debt securities (RCUIDS), on the basis of two RCUIDS for every five existing shares held on an entitlement date to be determined later.

“The proposed rights issue is undertaken to strengthen the company's capital base to a level which will better reflect the current scale of Hiap Teck group's operations and assets employed, as well as to support the business growth of the Hiap Teck group,” it said in a filing with the exchange today.

The rights issue is accompanied by the issue of up to 320.58 million free detachable warrants on the basis of three warrants for every four RCUIDS subscribed.

Further, Hiap Teck (fundamental: 0.35; valuation: 1.4) also proposed a bonus issue of up to 213.72 million new shares, on the basis of one share for every two RCUIDS subscribed, pursuant to the proposed rights issue.

To accommodate the fundraising exercise, the group plans to increase its authorised share capital to RM2 billion with 4 billion shares, from RM1 billion with 2 billion shares.

The proposals are subject to approvals being obtained from the relevant regulators and the shareholders of Hiap Teck at an extraordinary general meeting to be convened.

Barring any unforeseen circumstances and subject to all requisite approvals being obtained, Hiap Teck said it expects the proposals to be completed in the fourth quarter of 2015.

It said there will be a corresponding dilution in the earnings per share of the Hiap Teck Group upon completion of the proposed bonus issue as a result of the increase in the number of Hiap Teck Shares in issue.

"In future, any increase in the number of Hiap Teck shares in issue following the conversion of the RCUIDS and/or exercise of the New Warrants will dilute the EPS of the HTVB Group in the event that the earnings of the HTVB Group does not increase in tandem with the increase in the number of HTVB Shares in issue," it added.

Hiap Teck closed unchanged at 50.5 sen today, giving it a market capitalisation of RM352.89 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)