KUALA LUMPUR (Apr 3): UEM Sunrise Bhd is proposing an issuance of 524.39 million shares, the equivalent of an 11.6% stake in the existing issued and paid up share capital of the company, to its major shareholder UEM Group Bhd, to raise RM770.9 million to maintain its stake in subsidiary Bandar Nusajaya Development Sdn Bhd.
In a filing to Bursa Malaysia this evening, UEM Sunrise said the new shares will be issued at RM1.47 and that it has entered into a share subscription agreement today with UEM Group to effect the proposed issuance and allotment.
The subscription price represents a premium of approximately 10.0%, 10.1% and 10.9% to the 5-day, 1-month and 3-month volume weighted average market price (VWAP) of UEM Sunrise shares of RM1.336, RM1.335 and RM1.325 respectively, up to and including 31 March 2015.
The share subscription will be fully satisfied in cash, said UEM Sunrise.
“The gross proceeds raised from the proposed share issuance will be utilised to redeem, in part, the 450,000,000 redeemable convertible preference shares (RCPS) of RM1.00 each issued by Bandar Nusajaya to UEM Group on Nov 28, 2005,” said UEM Sunrise.
Bandar Nusajaya is a wholly-owned subsidiary of UEM Land Berhad, which in turn is a wholly-owned subsidiary of UEM Sunrise.
In the event that the RCPS are not redeemed, the RCPS will be automatically converted into Bandar Nusajaya shares upon its maturity on Nov 27, 2015, resulting in UEM Group having a direct stake in Bandar Nusajaya of approximately 21.8%.
“Given that Bandar Nusajaya is expected to significantly contribute to the future earnings of UEM Sunrise, the board is of the view that it would be in the best interest of UEM Sunrise to raise funds for the redemption of the RCPS.
It added that the proposed issuance will also increase UEM Sunrise’s shareholders’ funds and strengthen the capital position of the company.
The total redemption amount - assuming all the RCPS are redeemed in end-June 2015 - is approximately RM901.0 million.
“Any shortfall between the gross proceeds raised from the proposed share issuance and the total redemption amount will be settled via the proceeds raised from a proposed disposal of a property by Bandar Nusajaya to UEM Group,” said UEM Sunrise in its filing today.
It said Bandar Nusajaya and UEMG are expected to enter into the relevant sale and purchase agreement in relation to the proposed disposal by the 2nd quarter of 2015 and details of the proposed disposal will be announced in due course.
It added that the proposed share issuance is not expected to impact its consolidated earnings for the financial year ending Dec 31, 2015.
However, it noted that its consolidated earnings per share is expected to reduce proportionately upon the completion of the proposed share issuance, which will enlarge its issued and paid-up share capital to 5.06 billion shares.
Subsequent to the proposed share issuance, UEM Group will see its shareholding in UEM Sunrise increase to 69.6% from 66.1% currently, while other major shareholders like Lembaga Tabung Haji (now 5.1%) and the Employees Provident Fund Board (5%), will see their ownership diluted to 4.5% each.
UEM Sunrise closed unchanged at RM1.38 today, with a market capitalisation of RM6.26 billion.
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