KUALA LUMPUR (Aug 20): Guan Chong Bhd (GCB) has proposed a bonus issue of 527.94 million shares as well as 175.98 million free warrants to reward its shareholders and provide greater equity participation.

Guan Chong's share price jumped after the announcement, rising 41 sen or 11.62% to RM3.94 as at 3.48pm.

The cocoa processor said the bonus shares will be issued on the basis of one bonus share for every one existing share held by GCB shareholders at a date to be decided later.

The warrants, meanwhile, will be issued on the basis of one warrant for every three existing GCB shares, the group said in a filing with Bursa Malaysia.

GCB added that it had also submitted an application for an extension of time for the implementation of its proposed private placement of up to 47.78 million new GCB shares (up to 10% of its existing share capital, excluding treasury shares) to Bursa Malaysia.

The group said the actual number of bonus shares will depend on the number of its shares issued on the entitlement date.

As of Aug 16, the group has 480.16 million issued shares and 2.35 million treasury shares.

GCB said its five-day volume-weighted average market price (VWAMP) of GCB shares until Aug 16 was RM3.48, and the theoretical ex-bonus share price of its shares was RM1.74.

In addition, the group said the share price set for the proposed issue is not less than 50 sen, based on the counter's VWAMP during the past three months leading up to Aug 16.

As for the warrants, GCB said they will be issued at no cost to entitled shareholders, with the exercise price fixed at RM1.65 per warrant.

This exercise price represents a discount of 5.04% to GCB's theoretical ex-bonus price of RM1.74, which in turn is based on its five-day VWAMP up to and including Aug 16 of RM3.48.

As such, the group said it could net RM262.79 million from the conversion of a likely minimum warrant conversion into 159.27 million shares, and RM290.37 million if all warrants are exercised.

"Such proceeds to be raised, as and when the warrants are exercised, will be utilised for working capital of the group which may include payment of trade and other payables, employee costs, marketing and administrative expenses and repayment of bank borrowings," GCB said.

This means the group will have an enlarged share capital of up to 1.23 billion shares worth RM561.75 million if all warrants are exercised and its other proposals are fully taken up.