KUALA LUMPUR (Sept 21): Tanco Holdings Bhd has proposed the issuance of free warrants to reward shareholders, on the basis of one warrant for every two existing ordinary Tanco shares held on an entitlement date to be announced later.

In a filing with Bursa Malaysia today, the group said the proposed warrant issuance will involve the distribution of up to 410.82 million warrants, at no cost, to entitled shareholders.

The exercise price of the warrants has been fixed at 2 sen, which represents a discount of about 80% to the five-day volume weighed average price of Tanco shares of 10 sen, as at Sept 20.

As at Sept 20, Tanco's issued share capital stood at RM47.95 million comprising 661.65 million shares.

It also has an outstanding redeemable convertible notes with a nominal value of RM1 million, and unissued notes valued nominally at RM7 million pursuant to the first tranche of the notes.

Assuming all of the outstanding notes and unissued notes are converted into new Tanco shares at the minimum conversion price of 5 sen, the number of warrants to be issued pursuant to the proposal would be 410.82 million shares.

A minimum scenario where none of the notes are converted would see the issuance of 330.82 million warrants.

As such, the proposed free warrants issue is expected to raise proceeds between RM6.62 million and RM8.22 million upon exercise of the warrants, Tanco said in its bourse filing.

“Such proceeds are intended to be utilised as working capital requirements of the group, which may include, amongst others, development expenditures of the group's property development division and administrative expenses”, it added.

The property developer expects the proposed warrant issuance to be completed by the fourth quarter of 2017.

At market close today, Tanco shares settled one sen or 5.26% higher at 10 sen, giving it a market capitalisation of RM66.17 million.