Versatile Creative plans to sell 4% in Iris Corp to repay borrowings

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KUALA LUMPUR (Sept 13): Versatile Creative Bhd is planning to dispose of 98.42 million shares, equivalent to a 3.98% stake, in troubled Iris Corp Bhd as part of its plan to monetise non-core investments.

"The [board of] directors believe that monetising the non-core stake in Iris is beneficial as it is expected to provide the group with additional funding to pursue other investments," Versatile Creative, a printing and colour separation expert, said in a filing with Bursa Malaysia today.

Currently, Versatile Creative said its holdings of Iris shares are held by its wholly-owned unit Versatile Paper Boxes Sdn Bhd. Based on Iris's closing price of 18.5 sen today, Versatile Creative's nearly 4% stake is worth some RM18.21 million.

Assuming that the Iris shares are disposed of at 16.5 sen per share, Versatile Creative said it expects to net cash proceeds of RM16.24 million.

Of the proceeds, it said some 80% or RM13.01 million will be used to repay its borrowings while the remaining portion will be used to purchase equipment and machineries, with the rest to be used to defray expenses related to the corporate exercise.

Versatile Creative said the actual disposal price will be determined by the board at a later date.

Versatile Creative's borrowings stood at RM17.61 million as at March 31, and the repayment of the bank borrowings is expected to save an interest cost of RM760,000 per year, based on the effective interest rate of 5.82% per annum.

The printing firm said the borrowing repayment may gradually reduce its gearing to 0.28 times from 0.52 times currently.

To complete the disposal of its Iris shares, Versatile Creative said it will seek a mandate from its shareholders in a meeting to be convened at a later date. It wants the authority to dispose of the said shares within one year, either via the open market, off-market or a combination of both.

Versatile Creative said it may divest the shares in Iris in various tranches, and the disposal price will not be at a discount of more than 10% to the volume-weighted average price calculated within five days up to the date it disposes of them.

Iris was once Versatile Creative's major shareholder. In May 2016, Iris sold its 29.83% stake in Versatile Creative to Edmund Fong R. Boon for RM21 million.

According to its Annual Report 2016, Versatile Creative is controlled by managing director Datuk Wong Kong Choong with a 7.57% stake held via GT-M Sign Sdn Bhd.

Listed on the Main Market, Versatile Creative shares rose one sen or 1.27% to close at 79.5 sen today, giving it a market capitalisation of RM93.28 million.