(this article has been amended for accuracy)

KUALA LUMPUR (April 21): Sino Hua-An International Bhd (SHIB) has proposed the issuance of new shares to settle its debts totalling RM5.6 million, without incurring additional debt obligation or interest expense.  

In a filing with Bursa Malaysia, the company said RM3.5 million of debt owing to Chan Kok San, Jaleeludeen Abu Baker and Ong Sing Eng will be settled via the issuance of 55.64 million new ordinary shares, representing 4.96% of its total outstanding shares. 

Meanwhile, RM2.1 million owing to Advance Opportunities Fund (AOF) and Advance Opportunity Fund I (AOF I) will be settled via the issuance of 33.39 million new shares, representing 2.97% of the total number of shares issued.

The company said it signed three settlement agreements with each of the creditors —namely Chan, Jaleeludeen and Ong — today, for the settling of RM1.5 million, RM1.03 million and RM972,300 respectively. 

For AOF and AOF I, the company had entered into an agreement to settle RM1.6 million and RM525,000 in debt respectively. 

The creditors settlement issue price was fixed at 6.29 sen per share, after taking into consideration a discount of 9.89% to the five-day volume weighted average market price of SHIB’s shares up to yesterday. 

SHIB said the settlement agreements will allow the company to settle debt without incurring additional debt obligations and interest expenses, while also preserving its cash for other purposes.

Separately, the company also proposed a private placement exercise of up to 135.43 million shares to raise total gross proceeds of RM8.52 million. 

Some RM8.02 million of the proceeds will be utilised for working capital purposes, while the balance will go towards covering the estimated expenses for the exercise.

Barring unforeseen circumstances, the proposals are expected to be completed by the third quarter of 2020. 

SHIB’s share price fell 0.5 sen or 7.14% to 6.5 sen today, giving it a market capitalisation of RM72.95 million.