KUALA LUMPUR (Oct 11): Scomi Energy Services Bhd has proposed to reduce its issued share capital by RM560 million followed by the consolidation of every five existing shares into one unit.

In a statement to Bursa Malaysia today, Scomi Energy said the proposals are intended to rationalise the financial position and share capital of the company by reducing its accumulated losses and the number of shares issued.

"The reduction of the accumulated losses of the company is expected to enhance its credibility with its bankers, customers, suppliers, investors and other stakeholders and also provide a stronger financial platform for the future growth of the company and its subsidiaries.

"The reduction in the number of shares in issue as a result of the proposed share consolidation could potentially reduce the volatility in the market price of the shares as a result of higher theoretical market price, which will not have any impact on the total market value of the consolidated shares held by the shareholders of the company," Scomi Energy said.

The group said a higher theoretical market price for its shares is expected to enhance the corporate image of the company which, in turn, will increase market interest and activity in the stock.

Scomi Energy said today that as at Sept 20, 2019, its issued share capital of was RM1.01 billion comprising 2.34 billion shares.

The company said the share capital reduction will reduce its issued share capital to RM445.54 million comprising 2.34 billion shares.

"The proposed share capital reduction will give rise to a credit of RM560 million, which shall be used to set-off against the accumulated losses of the company," Scomi Energy said.

Upon completion of the share capital reduction, the 2.34 billion shares will be consolidated into 468.36 million units, it said.

"The proposed share consolidation will result in an adjustment to the reference price of the shares listed and quoted on the Main Market of Bursa Malaysia but will not have any impact on the total market value of the consolidated shares held by the company's shareholders.

"Barring any unforeseen circumstances, the proposals are expected to be completed by the 1st quarter of 2020," Scomi Energy said.

At Bursa's afternoon break today, Scomi Energy's share price settled up 0.5 sen or 5% at 10.5 sen. The stock saw 2.84 million units traded.