KUALA LUMPUR (Dec 3): Khee San Bhd (KSB) is placing out 94 million new shares representing about 45.11% of the candy manufacturer's enlarged issued base to Mamee-Double Decker (M) Sdn Bhd at 25 sen each to raise funds to support KSB's business operations. KSB's share price jumped on news of the share placement, which will make Mamee-Double Decker the controlling shareholder of KSB.
In a statement to Bursa Malaysia yesterday, KSB said that upon completion of the share placement or proposed subscription to Mamee-Double Decker, KSB will undertake a renounceable rights issue of 208.4 million new KSB shares at an indicative 18 sen each. The rights issue will be undertaken on the basis of one rights share for one existing KSB share.
"The proposed subscription will result in an expeditious injection of cash flow to support KSB's business operations. KSB group is principally involved in the manufacturing of candy and wafer product with key brands, being Fruitplus range of chewy candies and Torrone Barley Mint hard candies. Meanwhile, Mamee-Double Decker is an established household name in the food and beverage industry, serving over 50 products such as MAMEE Monster snack, Mister Potato Chips, and MAMEE Chef to over 100 countries worldwide.
"Following Mamee-Double Decker's entry as the controlling shareholder of KSB upon completion of the proposed subscription, strategic benefits are expected to be derived in view that both groups have established brands in the food and beverage industry, serving different market segments. As such, KSB Group and Mamee-Double Decker may potentially leverage on each other's extensive network of suppliers, distributors and customers to market their respective products, thereby increasing their market presence," KSB said.
KSB said it had yesterday (Dec 2) entered into the subscription agreement with Mamee-Double Decker for the private placement of the 94 million new shares in KSB.
Based on the subscription price of 25 sen per subscription share and the indicative issue price of 18 sen for each rights share, the proposals are expected to raise gross proceeds of approximately RM61 million, which KSB said will be used to repay its debt and finance its working capital needs.
Mamee Double-Decker is obliged to extend a mandatory general offer (MGO) at 25 sen each for the remaining KSB shares not already held by them under the listing requirements.
It should be noted that Mamee Double-Decker intends to maintain the listing status of Khee San upon completion of the MGO.
Khee San cautions shareholders that the MGO will only be triggered upon the subscription agreement being declared unconditional.
"Barring any unforeseen circumstances and subject to all required approvals being obtained, the proposals are expected to be completed in the first half of 2020," KSB said.
KSB said UOB Kay Hian Securities (M) Sdn Bhd has been appointed as adviser for the proposed share placement and rights issue. UOB Kay Hian is also the agent for the placement of the 94 million new shares in KSB to Mamee-Double Decker.
Newfields Advisors Sdn Bhd has been appointed as Mamee-Double Decker's financial adviser for the share placement.
KSB's share price rose on the news today, gaining as much as 11.5 sen or 38% to 42 sen in morning trades. At 10:48am, the counter was traded at 36 sen with some 46 million shares changing hands to become Bursa's most-active stock.
At 36 sen, KSB has a market capitalisation of RM34.89 million. KSB's share trade resumed today following yesterday's suspension ahead of the corporate exercise announcement.