KUALA LUMPUR (April 14): Poultry producer Lay Hong Bhd has obtained conditional approval from the Bursa Securities to carry out its private placement of up to 15% of its issued and paid up capital.    

In a filing to the exchange, Lay Hong (fundamental: 0.75; valuation: 0.8) said Bursa Securities had vide its letter on April 13, approved the listing of and quotation for up to 7.62 million placement shares to be issued pursuant to the proposed private placement.

In addition, the regulator also resolved that the listing of the new shares — representing up to 15% of Lay Hong’s issued and paid-up share capital (excluding treasury shares, if any) — will be issued pursuant to the exercise of options under its proposed share issuance scheme (SIS).

The approval is subject to a number of conditions, however.

Firstly, the placement shares should be placed out only to institutional investors.

Secondly, TA Securities Holdings Bhd, the placement agent, should submit the list of identified placees for Bursa Securities’ clearance prior to placing out the shares to the institutional investors.

Thirdly, Lay Hong and TA Securities must fully comply with the relevant provisions under the Listing Requirements pertaining to the implementation of the proposed private placement and inform Bursa Securities upon the completion of the placement.

In addition, Lay Hong needs to furnish Bursa Securities with written confirmation of its compliance with the terms and conditions, once the placement is completed.

Lay Hong must also incorporate Bursa Securities’ comments in the circular to shareholders.

On the proposed SIS, TA Securities is required to submit a confirmation to Bursa Securities of full compliance of the SIS and state the effective date of implementation, together with a certified true copy of the resolution passed by the shareholders at a general meeting approving the proposed SIS.

Also, TA Securities is required to furnish Bursa Securities on a quarterly basis, a summary of the total number of shares listed pursuant to the exercise of options under the Proposed SIS as at the end of each quarter, together with a detailed computation of listing fees payable; and incorporation of Bursa Securities’ comments in the circular to shareholders.

To recap, Lay Hong had announced a private placement of up to 30% on Feb 4, but subsequently revised the private placement to 15% on March 30.

Lay Hong’s proposed private placement of up to 30% came after QL Resources Bhd failed in its conditional takeover of the former, last December.

The proposed private placement is seen as a move that have a dilutive effect on QL’s interest in the company.

As at Dec 31, 2014, QL is the second biggest shareholder in Lay Hong, with a 38.7% stake. The biggest shareholder is the Yap family, with over 45% stake.

LHB closed flat at RM3.40 today, giving it a market capitalisation of RM172.82 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)