Further details of the Proposed Bonus Issue are set out in the ensuing sections of this announcement.

Transcription

1 KAWAN FOOD BERHAD ( KAWAN OR COMPANY ) PROPOSED BONUS ISSUE OF 89,879,940 NEW ORDINARY SHARES IN KAWAN 1. INTRODUCTION On behalf of the Board of Directors of ( Board ), Alliance Investment Bank Berhad ( AIBB ) wishes to announce that the Company proposes to undertake a bonus issue of 89,879,940 new ordinary shares in ( Bonus Share(s) ) to be credited as fully paid-up on the basis of one (1) Bonus Share for every three (3) existing ordinary shares in ( Share(s) ) held on the entitlement date to be determined and announced at a later date ( Bonus Entitlement Date ) ( Proposed Bonus Issue ). Further details of the Proposed Bonus Issue are set out in the ensuing sections of this announcement. 2. DETAILS OF THE PROPOSED BONUS ISSUE 2.1 Basis and number of Bonus Shares to be issued The Proposed Bonus Issue entails the issuance of 89,879,940 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every three (3) existing Shares held by the entitled shareholders of the Company, whose names appear in the Record of Depositors of the Company on the Bonus Entitlement Date. In determining shareholders entitlements to the Proposed Bonus Issue, fractional entitlements, if any, shall be dealt with by the Board in such a manner as they deem fit and expedient in the best interest of. The Proposed Bonus Issue is not intended to be implemented in stages over a period of time. 2.2 Capitalisation of reserve The Proposed Bonus Issue shall be capitalised from the share premium and retained earnings of at 0.50 per Bonus Share, being the reference to the par value of Shares immediately before the effective date of the Companies Act, 2016 ( Act ), pursuant to Section 618(7) of the Act. Based on the Company s latest audited financial statements for the financial year ended ( FYE ) 31 December 2016 and the latest unaudited quarterly results for the financial period ended ( FPE ) 31 March 2017, the pro forma effect of the Proposed Bonus Issue on the share premium and retained earnings of is illustrated below: 1

2 Company Level Share Premium* Retained Earnings Audited as at 31 December ,535,013 13,271,532 Less:- Add:- Single-tier interim dividend of 2.5 sen per Share in respect of the FYE 31 December 2017 which has been paid on 31 March (6,740,999) Dividend received from subsidiary^ - 5,000,000 37,535,013 11,530,533 Less: Amount to be capitalised for the Proposed Bonus Issue (37,535,013) (7,404,957) Less: Estimated expenses for the Proposed Bonus Issue - (135,000) After the Proposed Bonus Issue - 3,990,576 Company Level Share Premium* Retained Earnings Unaudited as at 31 March ,535,013 7,137,242 Add:- Dividend received from subsidiary^ - 5,000,000 37,535,013 12,137,242 Less: Amount to be capitalised for the Proposed Bonus Issue (37,535,013) (7,404,957) Less: Estimated expenses for the Proposed Bonus Issue - (135,000) After the Proposed Bonus Issue - 4,597,285 Notes: * Under the no par value regime of the Act which came into effect on 31 January 2017, the concept of share premium will no longer be applicable and any amount standing to the credit of the Company s share premium account shall be consolidated as part of its share capital. However, Section 618(4) of the Act provides that the Company may use its share premium account to fully pay up the Bonus Shares within a 24 months period from 31 January ^ In order to provide for the shortfall in reserves at the Company level, the subsidiary of had on 30 June 2017 declared dividends amounting million to to facilitate the implementation of the Proposed Bonus Issue. 2

3 The Board confirms that the Proposed Bonus Issue and the implementation of the Proposed Bonus Issue is and will be in full compliance with the Act and Practice Note 1/2017 issued by the Companies Commission of Malaysia on 8 February 2017 for the purposes of Sections 618(3) and 618(4) of the Act. Pursuant to Paragraph 6.30(1) of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ( Bursa Securities ), the Board also confirms that the Company has adequate reserves available for the capitalisation of the Bonus Shares and such reserves are unimpaired by losses on a consolidated basis, based on the Company s latest audited consolidated financial statements for the FYE 31 December 2016 and its latest unaudited quarterly results for the FPE 31 March Further, the Board will obtain a confirmation from the reporting accountants on the adequacy of reserves for the capitalisation under the Proposed Bonus Issue pursuant to Paragraph 6.30(3) of the Main Market Listing Requirements of Bursa Securities. The details of such confirmation will be disclosed in the circular to shareholders of to be issued at a later date. 2.3 Ranking of the Bonus Shares The Bonus Shares shall, upon issuance and allotment, rank pari passu in all respects with the existing Shares, save and except that the Bonus Shares shall not be entitled to any dividends, rights, allotments and/or other distributions, unless the Bonus Shares were allotted on or prior to the entitlement date of such dividends, rights, allotments and/or other distributions. 2.4 Listing of and quotation for the Bonus Shares An application will be made to Bursa Securities for the listing of and quotation for the Bonus Shares on the Main Market of Bursa Securities. The Bonus Shares will be listed and quoted on the Main Market of Bursa Securities on the next market day following the Bonus Entitlement Date. The notice of allotment for the Bonus Shares will be issued and despatched to the entitled shareholders within four (4) market days after the listing of and quotation for the Bonus Shares on the Main Market of Bursa Securities, or such other period as may be prescribed by Bursa Securities. As the Bonus Shares are prescribed securities under Section 14(5) of the Securities Industry (Central Depositories) Act, 1991, the Bonus Shares will be credited into the respective Central Depository System accounts of the entitled shareholders and no physical share certificates will be issued. 3. RATIONALE AND JUSTIFICATION FOR THE PROPOSED BONUS ISSUE The Proposed Bonus Issue is intended to reward the existing shareholders of the Company for their loyalty and continuing support to and its subsidiaries ( Group ), by enabling them to have a greater participation in the equity of the Company in terms of the increased number of Shares held, whilst maintaining their percentage of equity interest. In addition, the Proposed Bonus Issue will potentially improve the liquidity and marketability of on Bursa Securities by way of a larger capital base. 3

4 4. EFFECTS OF THE PROPOSED BONUS ISSUE For illustrative purposes, the pro forma effects of the Proposed Bonus Issue on s issued share capital, net assets ( NA ), NA per share and gearing, earnings and earnings per share ( EPS ) as well as the substantial shareholders shareholdings are set out below: 4.1 Issued share capital The pro forma effects of the Proposed Bonus Issue on the issued share capital of as at 3 July 2017, being the latest practicable date prior to this announcement ( LPD ) are as follows: Shares Amount Issued share capital as at the LPD 269,639, ,819,910 Number of Bonus Shares to be issued pursuant to the Proposed Bonus Issue Enlarged issued share capital after the Proposed Bonus Issue 89,879,940 44,939,970* 359,519, ,759,880 Note: * Capitalisation from share premium account and retained earnings account at 0.50 per Bonus Share, being the reference to the par value of Shares immediately before the effective date of the Act, pursuant to Section 618(7) of the Act. 4.2 NA, NA per share and gearing Based on the latest audited consolidated financial statements of for the FYE 31 December 2016, the pro forma effects of the Proposed Bonus Issue on s consolidated NA, NA per Share and gearing are as follows: Audited as at FYE 31 December 2016 (I) Adjusted for subsequent event (i) (II) After (I) and the Proposed Bonus Issue (ii) Share capital 134,819, ,819, ,759,880 Share premium 37,535,013 37,535,013 - Translation reserve 14,983,699 14,983,699 14,983,699 Retained earnings 104,094,576 97,353,577 89,813,620 Equity attributable to the owners of the Company / NA 291,433, ,692, ,557,199 Shares 269,639, ,639, ,519,760 NA per share () Total borrowings () 23,848,135 23,848,135 23,848,135 Gearing (times)

5 Notes: (i) (ii) After deducting single-tier interim dividend of 2.5 sen per Share amounting to million in respect of the FYE 31 December 2017 which has been paid on 31 March After (i) and deducting the estimated expenses for the Proposed Bonus Issue of 135,000 and the capitalisation of an amount of approximately million pursuant to the Proposed Bonus Issue. 4.3 Earnings and EPS The Proposed Bonus Issue is not expected to have any material effect on the earnings of Group for the FYE 31 December However, there will be a proportionate dilution in the EPS of due to the increase in number of Bonus Shares pursuant to the Proposed Bonus Issue, assuming that the earnings of the Group remain unchanged. 4.4 Substantial shareholders shareholdings The pro forma effects of the Proposed Bonus Issue on the shareholdings of the substantial shareholders of as at the LPD are as follows: As at the LPD After Proposed Bonus Issue Substantial shareholders Direct Indirect Direct Indirect Gan Thiam Chai 65,792, ,723, Maybank Securities Nominees (Asing) Sdn Bhd - Exempt AN for Volaw Trustee Limited (Narvee) 50,836, ,782, Gan Thiam Hock 16,000, ,333, Nareshchandra Gordhandas Nagrecha ,836,800* ,782,400* Note: * Deemed interested pursuant to Section 8 of the Act by virtue of his substantial shareholdings in Narvee Foundation. 5

6 4.5 Convertible securities As at the LPD, does not have any convertible securities. 5. APPROVALS REQUIRED AND CONDITIONALITY The Proposed Bonus Issue is subject to the following approvals being obtained: (i) (ii) (iii) Bursa Securities for the listing of and quotation for the Bonus Shares on the Main Market of Bursa Securities; The shareholders of for the Proposed Bonus Issue at a general meeting to be convened; and Any other relevant authorities and/or parties, if required. The Proposed Bonus Issue is not conditional or inter-conditional upon any other proposals undertaken or to be undertaken by the Company. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the directors and/or major shareholders of and/or persons connected with them have any interest, either direct or indirect, in the Proposed Bonus Issue, save for their respective entitlements as shareholders of under the Proposed Bonus Issue, the rights of which are also available to all other existing shareholders of as at the Bonus Entitlement Date. 7. DIRECTORS STATEMENT The Board, having considered all aspects of the Proposed Bonus Issue, including but not limited to the rationale and effects of the Proposed Bonus Issue, is of the opinion that the Proposed Bonus Issue is in the best interest of the Company. 8. APPLICATION TO THE RELEVANT AUTHORITIES AND ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the application to Bursa Securities in relation to the Proposed Bonus Issue is expected to be made within one (1) month from the date of this announcement. Barring any unforeseen circumstances and subject to all relevant approvals being obtained from the relevant authorities and/or parties, the Proposed Bonus Issue is expected to be completed by the third quarter of ADVISER AIBB has been appointed by the Company to act as the Adviser for the Proposed Bonus Issue. This announcement is dated 4 July