KUALA LUMPUR (July 20): Top Glove Corp Bhd proposed today a bonus issue of up to 5.48 billion new shares on the basis of two bonus shares for one existing unit held in the rubber glove manufacturer to reward shareholders and enhance trading liquidity of its shares.

In a statement to Bursa Malaysia today, Top Glove said implementation of the bonus issue without capitalisation of the company’s reserves is not expected to affect the group’s reserves and total net assets.

"After due consideration, the board is of the view that the proposed bonus issue is the most appropriate avenue of rewarding the existing shareholders of the company while at the same time enhance the company's capital base as the proposed bonus issue will: reward the existing shareholders of the company for their continuous support; enlarge the number of ordinary shares in the company held by the company's existing shareholders, without increasing the percentage of equity interest held; and potentially enhance the marketability and trading liquidity of the Top Glove shares on the Main Market of Bursa and Singapore Exchange.

"For avoidance of doubt, the treasury shares would be entitled to the bonus shares and such bonus shares will be treated as treasury shares held by the company at the time the bonus shares are allotted,” Top Glove said.

Top Glove said the bonus issue is not expected to have any material effect on the group’s earnings for financial year ending Aug 31, 2020. 

However, the group’s earnings per share will be proportionately diluted as a result of the increase in the number of Top Glove shares in issue upon completion of the bonus issue, according to the company.

"Barring any unforeseen circumstances and subject to all the required approvals being obtained, the board expects the proposed bonus issue to be completed by third quarter of calendar year 2020.

"The application to the relevant authorities in relation to the proposed bonus issue is expected to be made within one month from the date of this announcement,” Top Glove said.

Hong Leong Investment Bank Bhd has been appointed as the principal adviser to Top Glove for the bonus issue.

At 5pm today, Top Glove’s share price closed up RM1.84 or 8.01% at RM24.82 for a market capitalisation of RM66.94 billion. The stock pared gains after rising to its record high of RM26.18 earlier today.