KUALA LUMPUR (June 3): S P Setia Bhd has proposed a rights issue of up to 1.07 billion new Islamic redeemable convertible preference shares (RCPS-i) at an issue price of RM1 each, on the basis of two RCPS-i for every five existing shares.

In a filing with Bursa Malaysia today, S P Setia said its issued and paid-up share capital as at May 13 was RM1.97 billion comprising 2.63 billion shares.

The company also has 36.48 million outstanding exercisable employees' share options (ESOS Options) and 9.26 million S P Setia shares to be vested for this year pursuant to the company's long-term incentive plan.

"Assuming the outstanding exercisable ESOS Options are exercised and the share grants are vested prior to the entitlement date and all the entitled shareholders subscribe in full for their respective entitlements under the proposed rights issue, the maximum number of RCPS-i to be issued pursuant to the proposed rights issue is 1.07 billion," said S P Setia.

The rights issue is renounceable in full or in part, said S P Setia.

It added that the RCPS-i will carry the right to receive preferential dividends at the expected rate of 6.49% per annum.

The RCPS-i will be convertible at the option of its holders. The conversion ratio is two new S P Setia shares for every seven RCPS-i.

Based on the issue price and the conversion ratio, the implied conversion price is RM3.50 for every new S P Setia share, representing a premium of approximately 10.76% to S P Setia's weighted average market price of RM3.16 on June 2.

Under the maximum subscription scenario, based on the conversion ratio, the maximum number of new S P Setia shares to be issued upon full conversion of the RCPS-i is 305.62 million shares.

The rights issue is expected to raise gross proceeds of approximately RM536.6 million assuming a minimum subscription scenario, and RM1.07 billion assuming a maximum subscription scenario.

The group intends to use the proceeds to finance its existing property development projects, including Setia Ecohill 2 in Semenyih, Setia Eco Templer in Rawang, Setia Sky Seputeh in Kuala Lumpur, Setia Trio in Klang, as well as Setia Sky Vista and Setia Sky Ville in Penang.

S P Setia shares closed down one sen or 0.3% today to RM3.16 for a market capitalisation of RM8.3 billion.