KUALA LUMPUR: MTouche Technology Bhd has announced a series of proposals, including par value reduction, share consolidation, rights issue with warrants and employees’ share option scheme (Esos), for greater flexibility to raise funds.

In a filing with Bursa Malaysia, the information technology and telecommunication group said its current share price is not conducive to embark on any fundraising or corporate exercise involving the issuance of equity and equity-related securities.

Its proposed par value reduction, it added, will facilitate the implementation of the share consolidation and rights issue proposals.

The par value reduction will give rise to a total credit of up to RM12.7 million, assuming that none of the existing convertibles had been exercised as at Nov 30, and a total credit of up to RM18.6 million, assuming that all the existing convertibles had been exercised.

The share consolidation proposal involves the consolidation of every two shares into one new share, leading to a reduction in the number of shares available in the market for easier management.

“The company will have further flexibility to raise funds at an attractive price,” said MTouche.

The rights issue proposal involving the issuance of up to 557.5 million rights shares together with up to 278.8 million free warrants is to be implemented on a renounceable basis of six rights shares together with three free warrants for every two existing shares held. This will only be undertaken after the completion of the par value reduction and share consolidation proposals.

On the rights issue, MTouche said the minimum scenario would see proceeds of RM6 million with more than half spent on the development of a mobile digital ecosystem platform (MDEP) and another RM1.25 million spent on upgrades of the existing mobile value-added services platform.

Under the base scenario, MTouche will be able to raise RM38.2 million, while the maximum scenario would see RM55.8 million raised. The group intends to spend RM12 million on regional business expansion and RM7.5 million to acquire new office premises.

MTouche said its board intends to develop an MDEP as the company is of the view that its current core business will slowly be replaced by the adoption of smartphones.

The completion of the MDEP is expected to generate revenue from smartphone users, in-app purchases of mobile contents and applications of the MDEP, as well as through provision of marketing, advertising and sales services.

The proposed Esos is expected to attract more skilled and experienced individuals to join the group.

The proposals are expected to be completed by the third quarter of 2017, subject to all relevant approvals being obtained.