KUALA LUMPUR (Oct 30): Penang-based PVC products manufacturer, Tek Seng Holdings Bhd has proposed a bonus issue of up to 120 million free warrants on the basis of one free warrant for every two existing Tek Seng shares.

In a filing with Bursa Malaysia today, the company said the exercise price of the warrants will be pegged at 25 sen per warrant, being the par value of Tek Seng shares.

Tek Seng had featured as a Stock with Momentum on The Edge Markets on Oct 21, 2014.

According to Tek Seng, this represents a discount of 40 sen or 61.54% to the theoretical ex-all price of Tek Seng shares of 65 sen, calculated based on the five-day weighted average market price of Tek Seng shares up to and including Oct 24, 2014 of 85 sen per Tek Seng share.

“The proposed bonus issue of warrants is not expected to raise any funds as the warrants will be issued at no cost to the entitled shareholders,” said Tek Seng.

If the warrants were fully exercised, the company would raise proceeds of approximately RM300 million based on the indicative exercise price of 25 sen per warrant.

"The proceeds to be utilised for working capital will be used to finance the group's day to day operations. These expenses include, amongst others, payments for purchases of raw materials, utility bills and staff costs,” it said in a the filing with Bursa Malaysia.

As such, the company is also seeking to increase its authorized share capital from RM100 million comprising 400 million Tek Seng shares to RM500 million comprising two billion Tek Seng shares.

The company’s share price has shot up in 2014. Year-to-date, Tek Seng’s share price has grown by 186.2%. It reached a high of 88.5 sen on Sep 22. Today, the counter closed at 83 sen, giving it a market capitalisation of RM199.2 million.