This article first appeared in The Edge Financial Daily on December 4, 2019

KUALA LUMPUR: Scomi Group Bhd (SGB) announced yesterday that its proposed share capital reduction and share consolidation have been approved

by Bursa Malaysia Securities. However, the loss-making group’s Practice Note 17 (PN17) waiver application has been rejected.

In a filing with Bursa Malaysia yesterday, MIDF Investment Bank Bhd and Astramina Advisory, on behalf of SGB, said the approval was given on Monday.

SGB’s plan will see its issued share capital reduced to RM40 million from RM224.96 million. As per SGB’s initial filing on May 27 this year, the share capital reduction will give rise to a total credit of RM184.96 million.

SGB said then that the capital reduction will serve to rationalise the statement of its financial position whereby the credit arising thereof may be used to set off against the company’s future losses.

The share consolidation involves the listing of 467.8 million Warrants C from SGB’s rights issue of shares and restricted issue. It also involves the listing of up to 1.19 billion rights shares to be issued pursuant to the proposed rights issue with warrants.

The exercise will also see the listing of up to 215.1 million restricted issue shares, as well as up to 91.69 million settlement shares. There will be 467.8 million consolidated shares listed to be issued pursuant to the exercise of Warrants C as well.

MIDF and Astramina said Bursa Securities’ approval was subject to SGB fully complying with Listing Requirements pertaining to the proposals’ implementation.

PN17 waiver rejection due to concerns about business sustainability

In a separate Bursa filing, Scomi provided updates such as its PN17 waiver application being rejected by Bursa Securities on Monday due to concerns about its existing or remaining business’ sustainability and growth potential, and its ability to generate sufficient revenue and thus, profitability.

The classification is for cash-strapped entities under Bursa Malaysia’s listing rules.

“Pursuant to the above as well as Paragraph 8.04 and PN17 of the Listing Requirements, Scomi’s board of directors wishes to announce that the company is now regarded as an affected listed issuer (PN17 company) as it has triggered Paragraphs 2.1(a) and 2.1(e) of PN17 of the Listing Requirements,” Scomi said.

The criterion in Paragraph 2.1(a) states an entity’s unit holders’ fund (excluding non- controlling interest) on a consolidated basis is negative; while Paragraph 2.1 (e) states a default in payment of loans or credit facilities of a business trust or its major subsidiary or major associated company has arisen, and that the manager is unable to provide a solvency declaration to the exchange.

The trading of SGB shares was suspended in yesterday’s morning trade for the announcements. On resumption of trading, SGB shares settled 1.5 sen or 25% lower at 4.5 sen, with a market capitalisation of RM43.21 million. In the past one year, the stock has fallen 10%.