PETALING JAYA: IOI Properties Group Bhd (IOI Prop) has proposed to undertake a rights issue of new shares to raise about RM1.03bil for capital expenditure, investment opportunities and working capital purposes.
In a filing with Bursa Malaysia yesterday, the property group said the proposed rights issue involved 539.84 million shares at an issue price of RM1.90 apiece. The exercise would be implemented on a renounceable basis of one rights share for every six existing IOI Prop shares held at an entitlement date to be determined later.
IOI Prop also proposed to establish an employees’ share option scheme (Esos) of up to 10% of the issued and paid-up share capital of the group.
IOI Prop said both exercises were expected to be completed by the first quarter of 2015.
The proposed rights issue was expected to enlarge IOI Prop’s issued and paid-up share capital to 3.78 billion shares upon completion of the exercise. And assuming full exercise of the Esos options, IOI Prop’s capital base would be further enlarged to 4.16 billion shares.
On the issue price of RM1.90 per rights share, IOI Prop said it was arrived at after taking into consideration the theoretical ex-all price of the group’s shares of RM2.64 based on the five-day volume weighted average market price of IOI Prop’s shares up to and including Nov 7 being the last market day prior to the date of this announcement, of RM2.76.
The issue price of RM1.90 per rights share represented a discount of about 28% to the theoretical ex-all price. IOI Prop said the issue price was also determined after taking into consideration, the prevailing market conditions, current and future prospects of the IOI Prop and its subsidiaries, as well as the historical share price movement of its shares.
IOI Prop said the proposed rights issue was the most suitable avenue for the group to raise funds as the exercise would enable the company to raise the requisite funds without incurring additional interest expenses as compared to bank borrowings as well as minimise any potential cash outflow in respect of interest servicing.
It added that the exercise would provide an opportunity for existing shareholders to further participate in the equity of the company via the issuance of new shares at a discount to the prevailing market price, without diluting the existing shareholders’ interests, assuming that all the entitled shareholders fully subscribe for their respective entitlements. IOI Prop said the exercise would also will increase the group’s shareholders’ funds, strengthen its capital base and hence reduce its gearing levels.
Nevertheless, IOI Prop’s earnings per share was expected to be diluted for the financial year ending June 30, 2015, as a result of the increase in the number of shares in issue after the proposed rights issue.
~ By THE STAR
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