Details of the Proposed Private Placement are set out in the ensuing sections.

Transcription

1 BENALEC HOLDINGS BERHAD ( BENALEC OR THE COMPANY ) PROPOSED PRIVATE PLACEMENT OF UP TO 112,221,000 NEW ORDINARY SHARES IN BENALEC, REPRESENTING UP TO 10% OF THE TOTAL NUMBER OF ISSUED SHARES OF THE COMPANY (EXCLUDING TREASURY SHARES) ( PROPOSED PRIVATE PLACEMENT ) 1. INTRODUCTION On behalf of the Board of Directors of Benalec ( Board ), Hong Leong Investment Bank Berhad ( HLIB ) wishes to announce that the Company proposes to undertake a private placement of up to 112,221,000 new ordinary shares in the Company ( Placement Shares ), representing up to 10% of the total number of issued shares of the Company (excluding treasury shares). Details of the Proposed Private Placement are set out in the ensuing sections. 2. DETAILS OF THE PROPOSED PRIVATE PLACEMENT 2.1 Placement size Under the Proposed Private Placement, the Company proposes to issue up to 112,221,000 Placement Shares, representing up to 10% of the total number of issued shares of the Company (excluding treasury shares). The total number of issued shares of the Company was arrived at after taking into consideration the following: the issued share capital of the Company of RM360,488,527 comprising 811,802,500 ordinary shares ( Shares ) as at 10 April 2018, being the latest practicable date prior to this announcement ( LPD ), including 12,715,400 Shares held by the Company as treasury shares; (iv) assuming all the 12,715,400 Shares held by the Company as treasury shares are resold in the open market on Bursa Malaysia Securities Berhad ( Bursa Securities ); assuming full exercise of the 26,721,000 outstanding options as at the LPD ( Outstanding Options ), which have been offered under the existing share issuance scheme of the Company, into 26,721,000 new Shares; and assuming full conversion of the RM200.0 million in nominal value of 7-year redeemable convertible secured bond issued by the Company which are outstanding as at the LPD ( Outstanding Bond ) into 283,687,943 new Shares at the conversion price of RM0.705 per Share. The actual number of Placement Shares to be issued pursuant to the Proposed Private Placement will be determined by the Board at a later date and in any event, will not exceed 10% of the total number of issued shares of the Company (excluding treasury shares) at the point of issuance. 1

2 2.2 Placement arrangement The Placement Shares will be placed out to third party investors to be identified later. The placees of the Placement Shares shall fall within Part 1 of Schedule 6 (or Section 229(1)(b)) of the Capital Markets and Services Act 2007 ( CMSA ) and Part 1 of Schedule 7 (or Section 230(1)(b)) of the CMSA. The Placement Shares are not intended to be placed out to the following parties: a director, major shareholder or chief executive of the Company (each an Interested Person ); a person connected with an Interested Person; and nominee corporations, unless the names of the ultimate beneficiaries are disclosed. Subject to prevailing market conditions, the Proposed Private Placement may be implemented in multiple tranches within 6 months from the date of approval of Bursa Securities for the listing of and quotation for the Placement Shares or any extended period as may be approved by Bursa Securities. For the avoidance of doubt, the issue price for each tranche of the Placement Shares shall be determined separately. 2.3 Basis for determining the issue price of the Placement Shares The issue price of the Placement Shares shall be determined and fixed by the Board at a later date after obtaining the approval of Bursa Securities for the listing of and quotation for the Placement Shares. The issue price of the Placement Shares will be based on a discount of not more than 10% to the volume weighted average market price ( VWAMP ) of the Shares for the 5 market days immediately preceding the price-fixing date. 2.4 Ranking of the Placement Shares The Placement Shares shall, upon allotment and issuance, rank equally in all respects with the then existing Shares, save and except that the holders of Placement Shares will not be entitled to any dividends, rights, allotments and/or other distributions which may be declared, made or paid to shareholders, the entitlement date of which is before the date of allotment and issuance of the Placement Shares. 2.5 Listing of and quotation for the Placement Shares An application will be made to Bursa Securities for the listing of and quotation for the Placement Shares on the Main Market of Bursa Securities. 2.6 Use of proceeds The actual amount of proceeds to be raised from the Proposed Private Placement will depend on the actual number of Placement Shares issued and the issue price of the Placement Shares. For illustrative purposes, the indicative issue price of the Placement Shares is assumed at RM0.28 per Placement Share ( Indicative Issue Price ), representing a discount of approximately 9.3% to the 5-day VWAMP of the Shares up to and including the LPD of RM per Share. 2

3 Minimum Scenario : Assuming that all the treasury shares are retained by the Company and none of the Outstanding Options and Outstanding Bond are exercised or converted into new Shares before the implementation of the Proposed Private Placement, the total number of Placement Shares to be issued is 79,908,700. Maximum Scenario : Assuming that all the treasury shares are resold by the Company on Bursa Securities at cost and all the Outstanding Options and Outstanding Bond are exercised or converted into new Shares before the implementation of the Proposed Private Placement, the total number of Placement Shares to be issued is 112,221,000. Based on the Indicative Issue Price, the Proposed Private Placement is expected to raise gross proceeds of approximately RM22.4 million and RM31.4 million under the Minimum Scenario and Maximum Scenario respectively. The gross proceeds from the Proposed Private Placement are expected to be used in the following manner: Details of use of proceeds Minimum Scenario Maximum Scenario (RM 000) (RM 000) Expected time frame for use (from the date of listing of the Placement Shares) Land reclamation projects 12,074 21,122 Within 12 months Working capital requirements 10,000 10,000 Within 12 months Estimated expenses Within 1 month Total gross proceeds 22,374 31,422 Further information on the use of proceeds is as follows: Land reclamation projects Up to RM21.1 million of the gross proceeds to be raised shall be used to fund the ongoing and future land reclamation projects of the Company and its subsidiaries (collectively, the Group ). Expenditures relating to land reclamation works include operating expenses such as, among others, raw material costs, payments to sand concessionaires for the rights to dredge sand ex-seabed, payments to suppliers, direct labour costs, payments for sub-contracted services such as loading, unloading and levelling of sea sand, rock revetment/replacement works and hire of land equipment and machineries. As at the LPD, the Group has more than 300 acres of land in Melaka secured via land reclamation contracts which it has yet to reclaim. The Group expects to complete the reclamation works within the next few years. Other than the land reclamation projects in Melaka, the Group is also currently undertaking reclamation works at its 2 flagship projects in Johor, namely Tanjung Piai Maritime Industrial Park ( TPMIP ) and Pengerang Maritime Industrial Park ( PMIP ), measuring 3,487 acres and 1,672 acres respectively. TPMIP and PMIP will be developed into oil and gas industrial parks, which is in line with the Malaysian Government s plans for Johor to become a regional oil and gas hub. 3

4 The reclamation works in both TPMIP and PMIP have commenced after securing the Detailed Environment Impact Assessment approvals from the Department of Environment, Ministry of Natural Resources and Environment as well as the necessary approvals from the respective local councils. As at the LPD, the Group has sand-filled more than 150 acres in TPMIP and is currently preparing the first 100-acre plot for topside development. Reclamation works at PMIP commenced in November 2017 after full earthwork and development approvals were obtained in October As at the LPD, PMIP has seen the formation of over 34 acres of land. Working capital requirements RM10.0 million of the gross proceeds to be raised shall be used as the Group s working capital to finance its day-to-day operations including, among others, the payment of salaries, administrative and other operating expenses such as tax payment and finance costs. The breakdown of proceeds to be used for each component of working capital has not been determined at this juncture. Estimated expenses The estimated expenses for the Proposed Private Placement comprise professional fees, fees payable to authorities and other miscellaneous expenses. Any surplus or shortfall of the estimated expenses for the Proposed Private Placement will be adjusted accordingly to or from the portion allocated for the Group s land reclamation projects. Any variance in the actual gross proceeds raised and the intended gross proceeds to be raised will be adjusted against the amount allocated for the Group s land reclamation projects. Pending the use of proceeds from the Proposed Private Placement in the manner set out above, the proceeds will be placed in interest bearing deposits with financial institutions or short-term money market instruments as the Board may deem fit. 3. RATIONALE FOR THE PROPOSED PRIVATE PLACEMENT The Proposed Private Placement will enable the Group to raise funds primarily for its ongoing and future land reclamation projects and working capital requirements, details of which are set out in Section 2.6 above. After due consideration of the various funding options available to the Company, the Board is of the view that the Proposed Private Placement is the most appropriate avenue for the Company to raise funds as the Proposed Private Placement: (iv) allows the Group to raise funds expeditiously and cost effectively as compared to other fund raising exercises, such as a rights issue exercise which typically takes a longer time to implement; will serve as an additional source of funding for the Group without incurring further finance cost as compared to bank borrowings, thereby minimising any potential cash outflow in respect of interest servicing; allows the Group to raise funds in tranches based on market conditions and the prevailing market price of the Shares; and will increase the capital base of the Company and strengthen its financial position arising from the increase in the number of Shares in issue. 4

5 4. EFFECTS OF THE PROPOSED PRIVATE PLACEMENT 4.1 Issued share capital The pro forma effects of the Proposed Private Placement on the issued share capital of the Company are as follows: Existing issued share capital as at the LPD Assuming full exercise of the Outstanding Options Assuming full conversion of the Outstanding Bond To be issued pursuant to the Proposed Private Placement Minimum Scenario No. of Shares Share capital Maximum Scenario No. of Shares Share capital ( 000) (RM 000) ( 000) (RM 000) 811, , , , , ,688 (1) 15,173 (2) 200, , ,489 *1,122, ,662 (3) 79,909 (4) 22, ,221 (4) 31,422 Enlarged issued share capital *891, ,863 1,234,432 *607,083 Notes: * Differences between the amounts listed and the totals are due to rounding. (1) Based on the exercise prices of the Outstanding Options as follows: (iv) 3,257,500 Outstanding Options at RM1.06 per Share; 600,000 Outstanding Options at RM0.78 per Share; 6,253,500 Outstanding Options at RM0.79 per Share; and 16,610,000 Outstanding Options at RM0.38 per Share. (2) Based on the conversion price of the Outstanding Bond of RM0.705 per Share. (3) 79,908,700 Placement Shares to be issued pursuant to the Proposed Private Placement under the Minimum Scenario was arrived at after excluding 12,715,400 treasury shares held by the Company as at the LPD. (4) Based on the Indicative Issue Price. 5

6 4.2 Substantial shareholders shareholdings The pro forma effects of the Proposed Private Placement on the shareholdings of the Company s substantial shareholders, based on the Register of Substantial Shareholders of the Company as at the LPD, are as follows: Substantial shareholder Oceancove Sdn Bhd Dato Leaw Seng Hai Datuk Leaw Ah Chye Oceanview Cove Sdn Bhd After the Proposed Private Placement As at the LPD Minimum Scenario Maximum Scenario Direct Indirect Direct Indirect Direct Indirect No. of Shares No. of Shares No. of Shares No. of Shares No. of Shares No. of Shares ( 000) (1) (%) ( 000) (1) (%) ( 000) (1) (%) ( 000) (1) (%) ( 000) (%) ( 000) (%) 334, , , (2) 334, (2) 334, , (2) 334, * (2) 334, * (2) 334, * (2) 334, (3) 334, (3) 334, (3) 334, Notes: * Negligible. (1) The percentages of shareholdings have been computed net of treasury shares. (2) Deemed interest by virtue of his direct interest in Oceancove Sdn Bhd and indirect interest in Oceancove Sdn Bhd via Oceanview Cove Sdn Bhd pursuant to Section 8(4) of the Companies Act, 2016 ( Act ). (3) Deemed interest by virtue of its direct interest in Oceancove Sdn Bhd pursuant to Section 8(4) of the Act. 6

7 4.3 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 audited consolidated financial statements of the Company for the financial year ended 30 June 2017, are as follows: Minimum Scenario As at 30 June 2017 After the Proposed Private Placement (RM 000) (RM 000) Share capital 360,489 (1) 382,863 Reserves 264,580 (2) 264,280 NA *625, ,143 No. of issued Shares (excluding treasury shares) (3) 799,097 (4) 878,996 NA per Share (RM) Total borrowings 182, ,668 Gearing ratio (times) Maximum Scenario As at 30 June 2017 (I) Assuming all the treasury shares are resold and full exercise or conversion of the Outstanding Options and Outstanding Bond (II) After (I) and the Proposed Private Placement (RM 000) (RM 000) (RM 000) Share capital 360,489 (5)(6) 575,662 (1) 607,083 Reserves 264, ,279 (2) 276,979 NA *625,068 *852, ,062 No. of issued Shares (excluding treasury shares) (3) 799,097 1,122,211 1,234,432 NA per Share (RM) Total borrowings 182,668 24,838 24,838 Gearing ratio (times) Notes: * Differences between the amounts listed and the totals are due to rounding. (1) Based on the Indicative Issue Price. (2) After deducting estimated expenses of RM300,000 in relation to the Proposed Private Placement. 7

8 (3) Excluding 12,705,400 treasury shares held by the Company as at 30 June (4) Excluding 12,715,400 treasury shares held by the Company as at the LPD. (5) Based on the exercise prices of the Outstanding Options as follows: (iv) 3,257,500 Outstanding Options at RM1.06 per Share; 600,000 Outstanding Options at RM0.78 per Share; 6,253,500 Outstanding Options at RM0.79 per Share; and 16,610,000 Outstanding Options at RM0.38 per Share. (6) Based on the conversion price of the Outstanding Bond of RM0.705 per Share. 4.4 Earnings and earnings per Share The Proposed Private Placement is not expected to have a material effect on the earnings of the Group for the financial year ending 30 June However, the earnings per Share will be diluted as a result of the increase in the number of Shares in issue pursuant to the Proposed Private Placement. The Proposed Private Placement is expected to contribute positively to the future earnings of the Group as a result of the use of proceeds from the issuance of the Placement Shares to fund the Group s ongoing and future land reclamation projects and working capital requirements. 4.5 Convertible securities As at the LPD, save for the Outstanding Options and Outstanding Bond, the Company does not have any other outstanding convertible securities. The Proposed Private Placement will not have any effect on the terms and conditions of the Outstanding Options. The Proposed Private Placement may result in adjustment to the conversion price of the Outstanding Bond in accordance with the terms and conditions of the trust deed dated 27 March 2015 entered into between the Company and Pacific Trustees Berhad constituting the Outstanding Bond ( Trust Deed ) to ensure that the status of the holders the Outstanding Bond would not be prejudiced after the implementation of the Proposed Private Placement. Pursuant to the terms and conditions of the Trust Deed, the conversion price of the Outstanding Bond will only be adjusted if the issue price of the Placement Shares is less than 90% of the average of the last transacted market prices of the Shares for the 5 market days immediately before the price-fixing date. Save for the adjustment to the conversion price of the Outstanding Bond, if required, the rights and obligations of the holders of the Outstanding Bond will remain unchanged. 5. APPROVALS REQUIRED The Proposed Private Placement is conditional upon the approval being obtained from: Bursa Securities for the listing of and quotation for the Placement Shares on the Main Market of Bursa Securities; and any other relevant authorities, if required. Barring any unforeseen circumstances, the application to Bursa Securities for the Proposed Private Placement is expected to be submitted within 1 month from the date of this announcement. 8

9 At the 12 th annual general meeting ( AGM ) of the Company which was held on 22 November 2017, the Board has obtained the approval from the Company s shareholders pursuant to Sections 75 and 76 of the Act for the authority to issue new Shares, provided that the aggregate number of new Shares to be issued does not exceed 10% of the total number of issued shares of the Company (excluding treasury shares) ( General Mandate ). The General Mandate will continue to be in force until the conclusion of the next AGM of the Company or at the expiry of the period within which the next AGM is required to be held after the approval was given, whichever is earlier. The Board intends to allot and issue the Placement Shares under the General Mandate. As the Placement Shares will be issued under the General Mandate, the Proposed Private Placement does not require the approval of the shareholders of the Company. If the Placement Shares are not offered to third party investors before the expiry of the General Mandate, the offering of such Placement Shares will be conditional upon the General Mandate being renewed at the next AGM of the Company. The Proposed Private Placement is not 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 the Company and/or persons connected with them has any interest in the Proposed Private Placement. 7. DIRECTORS STATEMENT The Board, after having considered all aspects of the Proposed Private Placement (including the rationale for the Proposed Private Placement, the basis for determining the issue price of the Placement Shares, the use of proceeds arising from the issuance of the Placement Shares as well as the effects of the Proposed Private Placement), is of the opinion that the Proposed Private Placement is in the best interest of the Company. 8. PRINCIPAL ADVISER AND PLACEMENT AGENT HLIB has been appointed as the Principal Adviser and Placement Agent for the Proposed Private Placement. 9. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Private Placement is expected to be completed by the 2 nd quarter of This announcement is dated 11 April