Friday 29 Mar 2024
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KUALA LUMPUR (Jan 23): SMTrack Bhd has proposed a par value reduction and share consolidation exercise to reduce its accumulated losses, with the credit arising from the cancellation of share capital, in a bid to rationalise its balance sheet.

In a bourse filing, SMTrack proposed the cancellation of 7.5 sen of the par value of 10 sen each to 2.5 sen. Subsequently, the company proposed the consolidation of every four shares of 2.5 sen each into one new SMTrack share of 10 sen each.

“The proposed share consolidation will also enable the company to optimise its capital structure by reducing the number of SMTrack shares subsequent to the proposed capital reduction,” it said.

The company has also proposed a private placement of up to 26.007 million new SMTrack shares, equivalent to a 30% stake in the company after the capital reduction exercise, to fund its acquisition of Wellspring Worldwide Ltd.

Recall that SMTrack had on Aug 12, 2016, entered into a Memorandum of Understanding with the shareholders of Wellspring, which is principally involved in supply and distribution of food and food service products.

Based on an assumed issue price of 15 sen per placement share, the company expects to raise up to RM3.901 million.

“After having considered various fund raising options available to pay for the estimated expenses and deposit for the proposed acquisition, the proposed private placement is currently an appropriate avenue of fund raising as it enables the group to raise funds without incurring interest cost compared to bank borrowings.

“In addition, as the proposed private placement may be implemented in tranches, this enables the company to raise funds expeditiously on an “as needed” basis, said the company.

SMTrack shares closed up 0.5 sen or 12.5% at 4.5 sen, giving it a market capitalisation of RM15.6 million.

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