KUALA LUMPUR (March 10): Cleaning equipment maker SC Estate Builder Bhd (SCEB) today announced a capital reduction exercise and rights issue with warrants, as well as plans to diversify its principal activities.
In a filing with Bursa Malaysia, SC Estate said the proposed par value reduction involves the cancellation of four sen of par value for every five sen share, amd is aimed at writing off its accumulated losses of RM21.7 million as at Oct 31, 2016.
The rights issue of up to 6.39 billion shares will be on the basis of five rights shares for every one share held, together with up to 2.55 billion warrants on the basis of two warrants for every five rights share following the completion of the par value reduction.
Based on the indicative issue price of one sen per rights share, the total gross proceeds that are expected to be raised from the rights issue is up to RM63.94 million. It will be used for working capital, business acquisition and investment, and expenses related to the proposals.
SC Estate said that as at March 9, its major shareholders Takzim Empayar Sdn Bhd and SC Estate World Sdn Bhd held a 24.79% stake in the group.
It proposes to exempt the two firms and persons acting in concert from the obligation of undertaking a mandatory takeover offer for all the remaining shares not already owned by them.
SC Estate's principal activities are project management, building materials and equipment parts trading, and provision of mechanical and electrical engineering and maintenance services.
Moving forward, the group intends to diversify to include construction and its related business such as property development, civil engineering and special trade work.
The board anticipates that the new segment could contribute 25% or more to the net profit or net assets.
Barring unforseen circumstances, the board expects the proposals to be completed by the third quarter of 2017.
SC Estate's share price closed unchanged at 3.5 sen today, valuing the group at RM30.76 million.