PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY SHARES IN GFM SERVICES (EXCLUDING TREASURY SHARES)

Transcription

1 GFM SERVICES BERHAD ( GFM SERVICES OR COMPANY ) PROPOSED PRIVATE PLACEMENT OF UP TO 10% OF THE ISSUED ORDINARY SHARES IN GFM SERVICES (EXCLUDING TREASURY SHARES) 1. INTRODUCTION On behalf of the Board of Directors of GFM Services ( Board ), M&A Securities Sdn Bhd wishes to announce that the Company proposes to undertake a private placement of up to 10% of the issued ordinary shares of GFM Services ( Proposed Private Placement ). The Proposed Private Placement will be undertaken in accordance with the general mandate pursuant to Section 75 of the Companies Act 2016 obtained from the shareholders of the Company at its 4 th Annual General Meeting ( AGM ) held on 23 May 2017, whereby the Board has been authorised to allot and issue new ordinary shares in GFM Services ( GFM Services Shares ) not exceeding 10% of the issued ordinary shares of the Company (excluding treasury shares) ( Shareholders Mandate ). Further details of the Proposed Private Placement are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT 2.1 Placement size As at 4 May 2018, being the last practicable date preceding the date of this announcement ( LPD ), GFM Services issued share capital comprises 428,102,942 GFM Services Shares. Separately, GFM Services has also implemented an employee share scheme ( ESS ) of up to 5% of the issued ordinary shares of the Company (excluding treasury shares) at any point in time during the tenure of the ESS. The ESS, which became effective on 9 March 2018, comprises the establishment of an employee share option scheme and employee share grant scheme to the eligible persons of GFM Services and its subsidiaries (excluding those that are dormant). Taking into account the ESS, the Proposed Private Placement will therefore involve the issuance of up to 44,950,808 new GFM Services Shares ( Placement Share(s) ) representing not more than 10% of the issued share capital of the Company (excluding treasury shares). However, the actual number of GFM Services Shares to be issued pursuant to the Proposed Private Placement will be determined at a later date, after obtaining the relevant approvals. Subject to the prevailing market conditions, the Proposed Private Placement may be implemented in multiple tranches, if required, within 6 months from the date of approval of Bursa Malaysia Securities Berhad ( Bursa Securities ) for the listing of and quotation for the Placement Shares on the ACE Market of Bursa Securities (depending on investors interest at the point of implementation) or any extended period as may be approved by Bursa Securities, provided that the Placement Shares must not exceed 10% of the then issued ordinary shares of GFM Services (excluding treasury shares). 1

2 2.2 Basis of arriving at the issue price of the Placement Shares The issue price of each tranche of the Placement Shares, where applicable, shall be determined separately and fixed by the Board at a later date after obtaining the relevant approvals for the Proposed Private Placement. The Board will take into consideration amongst others, the prevailing market conditions and the provisions of Paragraph 6.05(a) of the ACE Market Listing Requirements of Bursa Securities ( AMLR ), in determining the issue price of the Placement Shares. The issue price shall not be a discount of more than 10% to the volume weighted average market price of GFM Services Shares for the 5 market days immediately preceding the price fixing date(s) ( 5D-VWAMP ). The mechanism to determine the issue price of the Placement Shares is in accordance with market based principles. For illustration purpose, the issue price of the Placement Shares is assumed to be RM0.46 each ( Indicative Issue Price ). The Indicative Issue Price represents a discount of approximately 8.84% to the 5D-VWAMP of GFM Services Shares for the 5 market days up to LPD of RM Placement arrangement The Placement Shares are proposed to be placed to independent investor(s) ( Placee(s) ) to be identified later. In accordance with Paragraph 6.05(c) of the AMLR, the Placement Shares will not be placed to the following parties: (i) (ii) an interested director, interested major shareholder or interested chief executive of GFM Services or a holding company of GFM Services (if applicable), or interested person(s) connected with such interested director, interested major shareholder or interested chief executive; and nominee corporations, unless the names of the ultimate beneficiaries are disclosed. Additionally, the Placees shall also be person(s) or party(ies) who/which qualify under Schedules 6 or 7 of the Capital Markets and Services Act Ranking of the Placement Shares The Placement Shares shall, upon issuance and allotment, rank equally in all respects with the then existing issued GFM Services Shares, save and except that the holders of the Placement Shares shall not be entitled to any dividends, rights, allotments and/or other forms of distributions that may be declared, made or paid to the shareholders of the Company, for which the relevant entitlement date precedes the date of allotment of the Placement Shares. 2.5 Listing of and quotation for the Placement Shares GFM Services shall make an application to Bursa Securities for the listing of and quotation for the Placement Shares on the ACE Market of Bursa Securities. 2

3 2.6 Utilisation of proceeds The proposed utilisation of proceeds is illustrated based on the following scenarios: Base Scenario Maximum Scenario : Assuming that no issuance of GFM Services Shares and no share options has been granted pursuant to the ESS and 42,810,294 Placement Shares are issued under the Proposed Private Placement at the Indicative Issue Price : Assuming that a total of 21,405,146 GFM Services Shares are issued pursuant to the ESS and 44,950,808 Placement Shares are issued under the Proposed Private Placement at the Indicative Issue Price The gross proceeds raised are expected to be utilised in the following manner: Part finance acquisition of KP Mukah Development Sdn Bhd ( KPMD ) Estimated expenses for the Proposed Private Placement Total estimated proceeds 19,693 20,677 Notes: Base Scenario RM 000 Maximum Scenario RM 000 Notes Expected time frame for utilisation of proceeds (from listing date) 19,053 20,017 (i) Within 6 months (ii) Within 1 month (i) (ii) GFM Services entered into a conditional share sale agreement ( SSA ) with Kumpulan Parabena Sdn Bhd to acquire the entire equity interest of KPMD on 26 January 2018 ( Acquisition ). This Acquisition was approved by the shareholders of GFM Services on 21 March Further details of the Acquisition are set out in the Circular to Shareholders dated 1 March As at the LPD, the Acquisition is not completed, pending the fulfilment of all the conditions precedents in the SSA. This includes payment of fees to the relevant authorities, advisory and placement fees. If the actual expenses are higher than the amount budgeted, the deficit will be funded out of proceeds allocated to part finance the Acquisition. Conversely, if the actual expenses are lower than the amount budgeted, the excess will be utilised to finance the Acquisition. The actual proceeds to be raised from the Proposed Private Placement are dependent on the issue price of the Placement Shares and actual number of Placement Shares issued. Pending full utilisation of the proceeds from the Proposed Private Placement for the abovementioned purposes, the proceeds will be placed in interest-bearing deposit accounts with licensed financial institution(s). The interest derived from such deposits will be used as additional working capital of GFM Services and its subsidiaries ( Group ). 3

4 3. RATIONALE The Proposed Private Placement will provide the Group with the necessary funding to part finance the Acquisition. The Acquisition will provide a platform for the Group to enhance its revenue and to gain immediate access into a profitable facilities management company which currently holds a concession awarded by the Government and Universiti Teknologi MARA commencing from 17 September 2012 to 17 September The Board is of the view that the Proposed Private Placement is the most appropriate avenue of fund raising as the Proposed Private Placement: (i) (ii) will enable the Group to raise the requisite funds without incurring additional interest expense, thereby minimising any potential cash outflow in respect of interest servicing; and is an expeditious way of raising funds from the capital market as compared with other forms of fund raising such as a rights issue exercise, as the Company has procured the Shareholders Mandate. 4. EFFECTS OF THE PROPOSED PRIVATE PLACEMENT 4.1 Share capital The pro forma effects of the Proposed Private Placement on the share capital of GFM Services are as follows: Base Scenario shares RM Share capital as at the LPD (1) 428,102,942 48,038,545 To be issued pursuant to the Proposed Private 42,810,294 19,692,735 Placement (2) Enlarged share capital 470,913,236 67,731,280 Maximum Scenario shares RM Share capital as at the LPD (1) 428,102,942 48,038,545 Assuming full exercise of share options and share grant 21,405,146 9,846,367 under the ESS (3) 449,508,088 57,884,912 To be issued pursuant to the Proposed Private 44,950,808 20,677,372 Placement (2) Enlarged share capital 494,458,896 78,562,284 Notes: (1) Including share premium of RM5,228,251, which became part of the Company s share capital pursuant to Section 618(2) of the Companies Act (2) Based on the Indicative Issue Price. (3) Assuming the issue / exercise price of the GFM Services Shares issued pursuant to the ESS is the Indicative Issue Price. 4

5 4.2 Net assets ( NA ) and gearing The pro forma effects of the Proposed Private Placement on the NA and gearing of the Group based on the latest audited consolidated financial position of the Group as at 31 December 2017 are as follows: Base Scenario Audited as at 31 December 2017 RM (1) (2) After Proposed Private Placement Share capital 48,038,545 67,731,280 Retained earnings 62,116,474 61,476,474 Fair value reserve 21,284 21,284 Reorganisation deficit (45,265,315) (45,265,315) Shareholders fund/na 64,910,988 83,963,723 Number of shares in issue 428,102, ,913,236 NA per ordinary share (RM) Borrowings (RM) 17,458,435 17,458,435 Gearing ratio (times) Maximum Scenario Audited as at 31 December 2017 (3) After the ESS RM (1) (2) After Proposed Private Placement Share capital 48,038,545 57,884,912 78,562,284 Retained earnings 62,116,474 62,116,474 61,456,474 Fair value reserve 21,284 21,284 21,284 Reorganisation deficit (45,265,315) (45,265,315) (45,265,315) Shareholders fund/na 64,910,988 74,757,355 94,774,727 Number of shares in issue 428,102, ,508, ,458,896 NA per ordinary share (RM) Borrowings (RM) 17,458,435 17,458,435 17,458,435 Gearing ratio (times) Notes: (1) (2) (3) Based on the Indicative Issue Price. After adjusting for the estimated expenses relating to the Proposed Private Placement of approximately RM640,000 for the base scenario and RM660,000 for the maximum scenario. Assuming the issue / exercise price of the GFM Services Shares issued pursuant to the ESS is same as the Indicative Issue Price. 5

6 4.3 Earnings and earnings per share ( EPS ) The Proposed Private Placement is expected to be earnings accretive due to the utilisation of proceeds which are to primarily to part finance the Group s acquisition of KPMD Acquisition. As such, the Proposed Private Placement is expected to contribute positively to the Group s future earnings as and when the benefits of the utilisation of proceeds are realised. The EPS of the Group will however be proportionately diluted as a result of the increase in the number of GFM Services Shares after the Proposed Private Placement. 4.4 Dividends The Proposed Private Placement will not have any effect on the dividend policy of the Company, if any. Future dividends to be declared by the Company will be dependent on, inter-alia the future financial performance as well as available cash of the Group. 4.5 Convertible securities The Company does not have any existing convertible securities as at LPD. [ This page is intentionally left blank ] 6

7 4.6 Substantial shareholders shareholding The pro forma effects of the Proposed Private Placement on the shareholding of the substantial shareholders of GFM Services based on the Company s Register of Substantial Shareholders as at LPD are set out in the table below: Base Scenario As at the LPD After Proposed Private Placement < Direct > < Indirect > < Direct > < Indirect > Substantial shareholders Shares % Shares % Shares % Shares % GFM Global Sdn Bhd 220,001, ,001, Ruslan Bin Nordin 26,500, (1) 220,001, ,500, (1) 220,001, Mohammad Shahrizal Bin 25,700, (1) 220,001, ,700, (1) 220,001, Mohammad Idris Zainal Bin Amir 25,700, (1) 220,001, ,700, (1) 220,001, Placees (collectively) ,810, Maximum Scenario As at the LPD (2) After the ESS After Proposed Private Placement <-----Direct-----> <---Indirect---> <-----Direct-----> <---Indirect---> <-----Direct-----> <---Indirect---> Substantial shareholders Shares % Shares % Shares % Shares % Shares % Shares % GFM Global Sdn Bhd 220,001, ,001, ,001, Ruslan Bin Nordin 26,500, (1) 220,001, ,500, (1) 220,001, ,500, (1) 220,001, Mohammad Shahrizal 25,700, (1) 220,001, ,700, (1) 220,001, ,700, (1) 220,001, Bin Mohammad Idris Zainal Bin Amir 25,700, (1) 220,001, ,700, (1) 220,001, ,700, (1) 220,001, Placees (collectively) ,950, Notes: (1) (2) Deemed interested by virtue of his shareholdings in GFM Global Sdn Bhd pursuant to Section 8 of the Companies Act, Assuming no issuance of GFM Services Shares and no share options granted pursuant to the ESS to the substantial shareholders. 7

8 5. APPROVALS REQUIRED The Proposed Private Placement is subject to the following approvals: (i) (ii) Bursa Securities, for the listing of and quotation for the Placement Shares on the ACE Market of Bursa Securities; and Any other relevant persons or authorities, if required. Approval has been obtained from the shareholders of GFM Services at the 4 th AGM held on 23 May 2017 authorising the Board to allot and issue new GFM Services Shares not exceeding 10% of the issued ordinary shares in the Company (excluding treasury shares) pursuant to Section 75 of the Companies Act The approval is valid, unless revoked or varied by the Company at a general meeting, until the conclusion of the next AGM of GFM Services. As such, the Proposed Private Placement does not require another specific approval from the shareholders of GFM Services if it is completed before the next AGM of GFM Services. If the Proposed Private Placement is not completed by the next AGM of GFM Services, the Proposed Private Placement shall require the approval from the shareholders of GFM Services before it can be implemented. Such approval from shareholders will be obtained pursuant to Section 75 of the Companies Act 2016 at the next AGM. The Proposed Private Placement is not conditional upon any other corporate proposals undertaken or to be undertaken by GFM Services. 6. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED WITH THEM None of the Directors and/or major shareholders of GFM Services and/or persons connected with them have any interest, whether direct or indirect, in the Proposed Private Placement. 7. DIRECTORS RECOMMENDATION The Board, after having considered all aspects of the Proposed Private Placement (including, but not limited to the rationale as set out in Section 3 and the effects as set out in Section 4), is of the opinion that the Proposed Private Placement is in the best interest of the Group and its shareholders. 8. ADVISER AND PLACEMENT AGENT M&A Securities Sdn Bhd has been appointed as the Adviser and Placement Agent to the Company for the Proposed Private Placement. 9. ESTIMATED TIMEFRAME FOR COMPLETION Barring unforeseen circumstances, the application to Bursa Securities in relation to the listing of and quotation for the Placement Shares on the ACE Market of Bursa Securities is expected to be made within 1 month from the date of this announcement. The Proposed Private Placement is expected to be completed by the 2 nd quarter of This announcement is dated 7 May