KUALA LUMPUR (June 19): Public Packages Holdings Bhd has proposed a bonus issue of 78.5 million new shares on the basis of five bonus shares for every seven existing shares held in the company.

The proposed bonus issue, whose entitlement date will be determined later, will involve capitalising RM39.25 million from its retained profits and share premium account.

“The board confirms that based on Public Packages’ latest audited consolidated financial statements for the financial year ended Dec 31, 2016 and latest unaudited quarterly report for the financial period ended March 31, 2017, the reserves required for capitalisation for the proposed bonus issue are adequate and unimpaired by losses on a consolidated basis,” the group said in a filing with Bursa Malaysia today.

The proposed bonus issue aims to potentially encourage trading liquidity of the group’s shares and to increase the group’s share capital to a level which will “better reflect the current scale of (our) operations and facilitate possible equity-linked fundraising exercises,” it said.

“The proposed bonus issue is not expected to have any material effect on the earnings of the group for the financial year ending Dec 31, 2017 (FY17). However, there will be a corresponding dilution in the earnings per share as a result of the increase in the number of shares issued under the proposed bonus issue,” Public Packages noted.

The group is also proposing to set up a scheme of up to 15% of the its total issued share capital for eligible employees, comprising both an employee share option scheme (ESOS) and employee share grant scheme (ESGS).

The net proceeds from the exercise of the ESOS is intended for working capital of the group, while the ESGS will not raise any proceeds, Public Packages said.

The proposed scheme involving employees is meant to retain, motivate and reward employees by recognising their contribution to the group as well as allowing them to participate in the group’s profitability.

Shares in Public Packages closed up one sen or 0.73% at RM1.38 today, with 717,900 shares traded, bringing a market capitalisation of RM150.56 million.