KUALA LUMPUR (Nov 14): Ho Wah Genting Bhd (HWGB) has proposed to undertake a four-to-one share consolidation, as well as diversify into the travel retail business.

It is also looking to raise gross proceeds of up to RM20.18 million via a private placement of up to 30% of its issued shares, or 77.62 million shares, after the proposed share consolidation exercise.

The proceeds will be used as shareholder's equity and shareholder's loan into a new business venture with Dufry International AG for the operation of a duty and tax free shop in Genting Highlands Resort, Pahang, and for the group's working capital.

In a filing with Bursa Malaysia today, HWGB said as at Nov 10, 2017, being the latest practicable date prior to the date of the announcement (LPD), the group's issued share capital stood at RM49.91 million comprising 998.25 million shares.

For illustrative purposes, the 998.25 million HWGB shares (assuming none of the outstanding convertible securities is exercised into new
shares) will be consolidated into 249.56 million consolidated shares pursuant to the exercise.

On its proposed private placement, HWGB's major shareholder Ho Wah Genting Holding Sdn Bhd has provided an irrevocable undertaking to subscribe to at least 37.43 million and up to 38.81 million placement shares, representing up to 50% of the total available placement shares pursuant to the exercise.

"The remaining placement shares are proposed to be placed out to independent investors to be identified at a later date," said HWGB.

"The actual number of placement shares to be issued pursuant to the proposed private placement will be determined at a later date, after obtaining all the relevant approvals for the proposals," it added.

For illustrative purposes, the volume weighted average market price (VWAMP) of HWGB shares for the five market days up to the LPD is 7.09 sen. As the proposed private placement is conditional upon the proposed share consolidation, upon completion of the latter, the theorethical adjusted VWAMP of the consolidated shares for the five market days will be 28.36 sen.

Assuming the issue price of the placement shares after the proposed share consolidation is at 26 sen per placement share, the indicative issue price represents an 8.32% discount over the theorethical adjusted VWAMP of the consolidated shares for the five market days up to the LPD of 28.36 sen.

HWGB also said the actual impact of the proposed diversification and proposed private placement on the group's consolidated earnings and earnings per share moving forward will depend on the successful expansion of HWGB into the travel retail business.

Barring unforeseen circumstances, the proposals are expected to be completed by the first half of 2018.

HWGB shares closed unchanged at 6.5 sen today, bringing a market capitalisation of RM64.89 million.