Further details on the Proposed Bonus Issue are set out in the following sections.

Transcription

1 HUA YANG BERHAD ( HYB OR THE COMPANY ) PROPOSED BONUS ISSUE OF 18,000,000 NEW ORDINARY SHARES OF RM1.00 EACH IN HYB ( HYB SHARE(S) OR SHARE(S) ) ( BONUS SHARE(S) ) ON THE BASIS OF ONE (1) BONUS SHARE FOR EVERY FIVE (5) EXISTING SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED LATER ( PROPOSED BONUS ISSUE ) 1. INTRODUCTION On behalf of the Board of Directors of Hua Yang Berhad ( HYB or the Company ) ( Board ), OSK Investment Bank Berhad ( OSK ) wishes to announce that the Company proposes to undertake a bonus issue of 18,000,000 new ordinary shares of RM1.00 each in HYB ( HYB Share(s) or Share(s) ) ( Bonus Share(s) ) on the basis of one (1) Bonus Share for every five (5) existing HYB Shares held on an entitlement date to be determined and announced later ( Entitlement Date ) ( Proposed Bonus Issue ). Further details on the Proposed Bonus Issue are set out in the following sections. 2. DETAILS OF THE PROPOSED BONUS ISSUE 2.1 Basis and Number of Bonus Shares The Proposed Bonus Issue will entail an issuance of 18,000,000 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every five (5) existing HYB Shares held by the entitled shareholders of the Company as at the close of business on the Entitlement Date. Based on the issued and paid-up share capital of the Company of RM90,000,000 comprising 90,000,000 Shares, 18,000,000 Bonus Shares shall be issued pursuant to the Proposed Bonus Issue. Fractional entitlements arising from the Proposed Bonus Issue, if any, shall be dealt in such manner as the Board shall in their absolute discretion deem fit and expedient in the best interest of the Company. 2.2 Capitalisation of Reserves The Proposed Bonus Issue shall be wholly capitalised from the Company s share premium, capital redemption reserves and retained earnings account. Based on the Company s latest audited financial statement for the financial year ended ( FYE ) 31 March 2010 and the latest unaudited results for the first quarter financial period ended ( FPE ) 30 June 2010, the share premium and retained earnings balance of the Company are as follows:- Share Premium Capital Redemption Reserve Retained Earnings Total Company Level RM 000 RM 000 RM 000 RM 000 Audited as at 31 March , ,576 17,773 Final dividend (1) - - (2,025) (2,025) Interim dividend (2) ,525 12,525 Amount to be capitalised for the Proposed Bonus Issue (6,697) (500) (10,803) (18,000) Estimated expenses for the Proposed Bonus Issue - - (90) (90) Balance after the Proposed Bonus Issue ,183 10,183 1

2 Share Premium Capital Redemption Reserve Retained Earnings Total Company Level RM 000 RM 000 RM 000 RM 000 Unaudited as at 30 June , ,682 30,879 Final dividend (1) - (2,025) (2,025) Amount to be capitalized for the Proposed Bonus Issue (6,697) (500) (10,803) (18,000) Estimated expenses for the Proposed Bonus Issue - - (90) (90) Balance after the Proposed Bonus Issue ,764 10,764 Notes:- (1) Being the proposed first and final net dividend of RM per share, in respect of FYE 31 March (2) Being the net interim dividend received in respect of the FYE 31 March 2011 from the following subsidiary companies of HYB:- Subsidiary companies RM 000 Agro Mod Industries Sdn Bhd 6,000 Grandeur Park Sdn Bhd 5,625 Prisma Pelangi Sdn Bhd 900 Total 12,525 The Board confirms that the reserves of the Company (after adjusting for dividend payments from the subsidiaries of HYB) are adequate for the capitalisation of the Proposed Bonus Issue based on the latest audited financial statements as well as the latest quarterly report. Further, pursuant to paragraph 6.30(3) of the Main Market Listing Requirement of Bursa Malaysia Securities Berhad ( Bursa Securities ), the Board will obtain a confirmation from the external auditors/reporting accountants on the adequacy of reserves to cover the capitalisation of the Proposed Bonus Issue, details of which will be disclosed in the Circular to Shareholders to be issued. The reserves required for the capitalisation of the Proposed Bonus Issue are unimpaired by losses on a consolidated basis and the Proposed Bonus Issue will not be implemented in stages over a period of time. 2.3 Ranking of the Bonus Shares The Bonus Shares shall, upon allotment and issuance, rank pari passu in all respects with the existing HYB Shares, save and except that the new HYB Shares will not be entitled to any dividends, rights, allotments and/or other distributions that may be declared, made or paid where the entitlement date precedes the date of allotment of such new Bonus Shares. 2.4 Listing of and Quotation for the Bonus Shares An application will be made for the listing of and quotation for the Bonus Shares on the Main Market of Bursa Securities. 2

3 3. RATIONALE AND JUSTIFICATION FOR THE PROPOSED BONUS ISSUE The Proposed Bonus Issue aims to reward the existing shareholders of the Company for their loyalty and continuing support, by enabling them to have a greater participation in the equity of the Company in terms of number of shares held, whilst maintaining their percentage of equity interest. In addition, the Proposed Bonus Issue is expected to improve the trading liquidity of HYB Shares on Bursa Securities and increase the capital base of the Company. 4. EFFECTS OF THE PROPOSED BONUS ISSUE 4.1 Share Capital The proforma effects of the Proposed Bonus Issue on the issued and paid-up share capital of HYB are as follows:- No. of Shares RM Issued and paid-up share capital As at 30 June 2010 To be issued pursuant to the Proposed Bonus Issue Enlarged issued and paid-up share capital 90,000,000 90,000,000 18,000,000 18,000, ,000, ,000, Net Assets and Gearing Based on the audited consolidated balance sheets of HYB as at 31 March 2010, the proforma effects of the Proposed Bonus Issue on the Net Assets ( NA ) and gearing of HYB are as follows:- Proforma I Audited as at After the 31 March 2010 Proposed Bonus Issue (RM 000) (RM 000) Share Capital 90, ,000 Share Premium 6,697 - Retained Earnings 98,627 ^ 85,709 Capital Redemption Reserve , ,709 Minority Interest 1,760 1,760 Shareholders Equity / NA 197, ,469 No. of Shares 90, ,000 NA per Share (RM) Borrowings (RM) 56,801 56,801 Gearing (times) Note:- ^ After netting off estimated expenses of approximately RM90,000 in relation to the Proposed Bonus Issue and the proposed first and final net dividend payable of approximately RM2.025 million. 4.3 Earnings The Proposed Bonus Issue is not expected to have any material effect on the earnings of the Group for the FYE 31 March However, there will be a corresponding dilution in the earnings per share of the Group as a result of the increase in the number of shares arising from the Proposed Bonus Issue. 3

4 4.4 Convertible Securities As at 30 June 2010, there are no options, warrants or convertible securities issued by the Company. 4.5 Substantial Shareholders Shareholdings The Proposed Bonus Issue will not have any effect on the substantial shareholders percentage shareholdings in HYB, as the Bonus Shares will be allotted on a pro-rata basis to all the shareholders of the Company. The number of Shares held by the substantial shareholders will increase proportionately pursuant to the Proposed Bonus Issue. 5. APPROVALS REQUIRED The Proposed Bonus Issue is conditional upon approvals being obtained from the following:- (i) (ii) (iii) Bursa Securities, for the listing of and quotation for the new Bonus Shares on the Main Market of Bursa Securities; the shareholders of the Company, for the Proposed Bonus Issue at the forthcoming Extraordinary General Meeting; and any other relevant authorities and/or parties, if required. 6. INTER-CONDITIONALITY The Proposed Bonus Issue is not conditional upon any other corporate exercise undertaken or to be undertaken by HYB. 7. DIRECTORS AND MAJOR SHAREHOLDERS INTEREST None of the Directors and major shareholders of the Company and/or persons connected to them has any interest, direct or indirect, in the Proposed Bonus Issue apart from their respective entitlement under the Proposed Bonus Issue, which are also available to all other shareholders of the Company. 8. BOARD S RECOMMENDATION The Board, having considered all aspects of the Proposed Bonus Issue, is of the opinion that the Proposed Bonus Issue is in the best interest of the Company. 9. ADVISER OSK has been appointed by the Company to act as the Adviser for the Proposed Bonus Issue. 10. ESTIMATED TIMEFRAME FOR COMPLETION Barring any unforeseen circumstances, the Board expects the Proposed Bonus Issue to be completed by the third quarter of the year

5 11. APPLICATION TO RELEVANT AUTHORITIES Applications to the relevant authorities for the Proposed Bonus Issue are expected to be submitted within one (1) week from the date of this announcement. This announcement is dated 16 July