KUALA LUMPUR (Aug 27): The major shareholders of Daiman Development Bhd have proposed to undertake a selective capital reduction (SCR) and repayment exercise to take the company private at RM3 a share or RM295.48 million in total.

The proposal came after the group and its subsidiaries found themselves in a challenging operating environment, in view of tightening credit controls by financial institutions, oversupply of residential properties, increasing cost of construction and economic uncertainties resulting in restrained consumer spending.

Additionally, the trading liquidity of Daiman shares has been very low, with an average daily trading volume of 32,218 Daiman shares for the past three years up to the latest practicable date (LPD), according to its Bursa Malaysia filing today.

Daiman said the joints offerors Tay Kia Hong & Sons Sdn Bhd and Daiman Holdings Sdn Bhd, as well as 14 persons acting in concert (PACs) led by its managing director Tay Thiam Song, collectively hold 112.39 million Daiman’s shares, representing about 53.38% stake in the company.

The proposed SCR will result in a reduction in the issued share capital of Daiman (excluding treasury shares held by Daiman) by up to RM295.48 million, comprising of up to 295.48 million Daiman shares.

“In view that capital reduction is higher than the existing issued share capital of Daiman, a bonus issue is proposed to be undertaken by Daiman to increase the share capital of Daiman up to a level which is sufficient for the capital reduction to facilitate the proposed SCR,” it said.

The offer price of RM3 per share is at a 38.25% premium to Daiman’s closing price of RM2.17 on Friday (Aug 24), the company pointed out in the filing.

As at Aug 24, being the LPD, the issued share capital of Daiman stood at RM232.76 million, comprising of 210.57 million shares (excluding the 1.62 million treasury shares held by Daiman).

Daiman said the proposed SRC will be tabled at an extraordinary general meeting to be convened soon.

On Aug 23, the group proposed a first and final single-tier dividend of 5 sen per share in respect of the financial year ended June 30, 2018 (FY18), for which the entitlement and payment dates have yet to be determined.

“Notwithstanding this, the joint offerors have vide the SCR offer letter indicated that the SCR offer price will not be reduced by the proposed dividend and as such, all entitled shareholders will be entitled to the proposed dividend,” it added.

Earlier today, Daiman’s share trade was suspended from 9am, pending a material announcement.

Daiman, which had a market capitalisation of RM456.94 million as of Friday (Aug 24), said today evening that trading will resume tomorrow at 9am.