Nov 18, 2016 - of one (1) Rights Share for every four (4) existing IOIPG Shares held on an entitlement date to be determ
IOI PROPERTIES GROUP BERHAD (“IOIPG” OR THE “COMPANY”) PROPOSED RIGHTS ISSUE
1.
INTRODUCTION On behalf of the Board of Directors of IOIPG (“Board”), AmInvestment Bank Berhad (“AmInvestment Bank”) wishes to announce that the Company is proposing to undertake a renounceable rights issue of up to 1,111,178,800 new ordinary shares of RM1.00 each in IOIPG (“IOIPG Shares”) (“Rights Shares”) at an issue price of RM1.38 per Rights Share on the basis of one (1) Rights Share for every four (4) existing IOIPG Shares held on an entitlement date to be determined later (“Entitlement Date”) (“Proposed Rights Issue”).
2.
DETAILS OF THE PROPOSED RIGHTS ISSUE 2.1
Proposed Rights Issue The Proposed Rights Issue of up to 1,111,178,800 Rights Shares at an issue price of RM1.38 is to be implemented on a renounceable basis of one (1) Rights Share for every four (4) existing IOIPG Shares held on the Entitlement Date. As at 15 November 2016, being the latest practicable date prior to this announcement (“LPD”), the issued and paid-up share capital of IOIPG was RM4,423,626,700 comprising 4,423,626,700 IOIPG Shares, including 12,411,500 treasury shares. In addition, as at the LPD, there were 33,500,000 outstanding exercisable options (“ESOS Options”) granted under the Company’s employees’ share option scheme (“ESOS”). For illustration purposes, the number of Rights Shares that would be issued under the Proposed Rights Issue would be:(i)
1,102,803,800 Rights Shares, assuming none of the outstanding exercisable ESOS Options as at the LPD are exercised and none of the treasury shares as at the LPD are cancelled or resold prior to the Entitlement Date (“Minimum Scenario”); or
(ii)
1,111,178,800 Rights Shares, assuming all of the outstanding exercisable ESOS Options as at the LPD are exercised and none of the treasury shares as at the LPD are cancelled or resold prior to the Entitlement Date (“Maximum Scenario”).
For avoidance of doubt, the Company does not intend to grant new ESOS Options from the LPD up to the Entitlement Date. The Rights Shares will be offered to the shareholders of IOIPG whose names appear in the Record of Depositors of the Company as at the close of business on the Entitlement Date (“Entitled Shareholders”). The Entitled Shareholders can fully or partially renounce their entitlements for the Rights Shares. Accordingly, the Entitled Shareholders can subscribe for and/or renounce their entitlements to the Proposed Rights Issue in full or in part. Any Rights Shares which are not taken up or validly taken up shall be made available for excess Rights Shares applications by the Entitled Shareholders and/or their renouncee(s) (if applicable). It is the intention of the Board to allocate the excess Rights Shares in a fair and equitable manner on such basis to be determined by the Board and announced later by the Company.
1
In determining shareholders’ entitlements to the Rights Shares under the Proposed Rights Issue, fractional entitlements, if any, will be disregarded and dealt with in such manner as the Board in its absolute discretion deems fit, expedient and in the best interests of the Company. 2.2
Basis of determining the issue price of the Rights Shares The Board has decided to fix the issue price of the Rights Shares at RM1.38 per Rights Share. The issue price of RM1.38 per Rights Share was arrived at after taking into consideration the theoretical ex-rights price (“TERP”) of IOIPG Shares of RM2.1396 based on the five (5)-day volume weighted average market price of IOIPG Shares up to and including the preceding market day prior to this announcement of RM2.3295. The issue price of RM1.38 per Rights Share represents a discount of approximately 35.50% to the abovementioned TERP. The issue price of the Rights Shares was determined after taking into consideration, amongst others, the prevailing market conditions, the current and future prospects of IOIPG and its subsidiaries (“Group”) as well as the historical share price movement of IOIPG Shares vis-a-vis the funding requirements of IOIPG.
2.3
Utilisation of proceeds Based on the issue price of RM1.38 per Rights Share, the gross proceeds and the expected utilisation of the proceeds to be raised from the Proposed Rights Issue are as follows:-
Proposed utilisation Repayment of borrowings(2)
Minimum Scenario (RM’ million)
Maximum Scenario (RM’ million)
1,520.87
1,532.43
Within eighteen (18) months
1.00
1.00
Within six (6) months
1,521.87
1,533.43
Estimated expenses(3) Total
Estimated time frame for utilisation(1)
Notes:(1) From the date of listing of and quotation for the Rights Shares. (2)
As at 30 June 2016, the total borrowings of the Group amount to approximately RM4.3 billion which comprise mainly of term loans. Further, as announced by the Company on 11 November 2016, Wealthy Link Pte Ltd, a wholly-owned subsidiary of IOIPG, had on 11 November 2016 successfully tendered for a parcel of leasehold land at Central Boulevard in the Republic of Singapore measuring approximately 10,868.70 square metres (1.09 hectares) (“Central Boulevard Land”) for a tender consideration of SGD2,568,686,688 (approximately RM7.77 billion) (“Tender Consideration”) from the Urban Redevelopment Authority, acting as agent for and on behalf of the Government of the Republic of Singapore. Please refer to the Company’s announcement dated 11 November 2016 for further details of the Central Boulevard Land. The Company is in the midst of procuring bank borrowings which will be utilised for full settlement of the Tender Consideration. The proceeds from the Proposed Rights Issue will be utilised to repay the Group’s borrowings and/or the borrowings to be obtained to fund the Tender Consideration, the breakdown of which has yet to be finalised at this juncture. Any excess in funds allocated for repayment of borrowings will be used for the Group’s working capital purposes, which include the payment to suppliers and contractors for ongoing development projects as well as for day-to-day operations.
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(3)
2.4
The estimated expenses include professional fees and fees payable to the relevant authorities, printing cost of circular and abridged prospectus, advertisement and miscellaneous expenses. Any shortfall or excess in funds allocated for estimated expenses will be funded from or used for the Group’s repayment of borrowings and/or working capital purposes.
Substantial shareholders’ undertakings The Company intends to undertake the Proposed Rights Issue on a full subscription basis (i.e. full subscription for up to 1,111,178,800 Rights Shares proposed to be issued under the Proposed Rights Issue) (“Full Subscription Level”). In order to meet the Full Subscription Level, the Company intends to procure from certain substantial shareholders of the Company, namely Tan Sri Dato’ Lee Shin Cheng (“TSDLSC”), Dato’ Lee Yeow Chor (“DLYC”), Lee Yeow Seng (“LYS”), Vertical Capacity Sdn Bhd (“VCSB”) and Summervest Sdn Bhd (“Summervest”) to provide written irrevocable and unconditional undertakings to subscribe in full for their/its respective entitlements, as well as to subscribe for additional Rights Shares via excess applications, to the extent that such Rights Shares are not taken up or are not validly taken up by other Entitled Shareholders and/or their renouncee(s) under the Proposed Rights Issue (“Undertakings”). In view of the Undertakings, there is no underwriting arrangement for the Proposed Rights Issue. The Undertakings will not give rise to any consequences relating to a mandatory takeover offer obligation under the Rules on Take-overs, Mergers and Compulsory Acquisitions issued by the Securities Commission Malaysia.
2.5
Ranking of the Rights Shares The Rights Shares to be issued under the Proposed Rights Issue shall, upon allotment and issue, rank pari passu in all respects with the then existing issued and paid-up IOIPG Shares, save and except that they shall not be entitled to any dividends, rights, allotments and/or any other forms of distributions that may be declared, made or paid to shareholders, the entitlement date of which is prior to or on the date of allotment of the Rights Shares.
3.
RATIONALE FOR THE PROPOSED RIGHTS ISSUE The Proposed Rights Issue is mainly undertaken to raise funds to reduce the Group’s borrowings. After due consideration of the proposed utilisation of proceeds as set out above and the various methods of fund raising, the Board is of the opinion that raising funds by way of the Proposed Rights Issue is most suitable for the following reasons:(i)
the Proposed Rights Issue will enable the Company to raise the requisite funds for the reduction of the Group’s borrowings so as to minimise cash outflow in respect of interest servicing and improve the Group’s overall cash flow management;
(ii)
the Proposed Rights Issue will provide an opportunity for existing shareholders of IOIPG to further participate in the equity of the Company via the issuance of new IOIPG 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 pursuant to the Proposed Rights Issue; and
(iii)
the Proposed Rights Issue will increase the Group’s shareholders’ funds, strengthen the Group’s capital base and hence reduce its gearing levels.
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4.
EFFECTS OF THE PROPOSED RIGHTS ISSUE 4.1
Share capital The proforma effects of the Proposed Rights Issue on the issued and paid-up share capital of IOIPG are as follows:Minimum Scenario No. of IOIPG Shares (’000) (RM’000) Issued and paid-up share capital as at the LPD Less: Treasury shares To be issued upon full exercise of the outstanding ESOS Options To be issued pursuant to the Proposed Rights Issue Enlarged issued and paid-up share capital
4.2
Maximum Scenario No. of IOIPG Shares (’000) (RM’000)
4,423,627
4,423,627
4,423,627
4,423,627
(12,412) 4,411,215 -
(12,412) 4,411,215 -
(12,412) 4,411,215 33,500
(12,412) 4,411,215 33,500
4,411,215 1,102,804
4,411,215 1,102,804
4,444,715 1,111,179
4,444,715 1,111,179
5,514,019
5,514,019
5,555,894
5,555,894
Earnings and earnings per share (“EPS”) The EPS of the Group is expected to be diluted for the FYE 30 June 2017 as a result of the increase in the number of IOIPG Shares in issue after the Proposed Rights Issue. However, the Board expects the Proposed Rights Issue to contribute positively to the future earnings of the Group via the utilisation of the proceeds, which is expected to contribute to the future earnings of the Group over the long-term.
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4.3
Net assets (“NA”) and gearing Based on the latest audited consolidated financial statements of IOIPG for the FYE 30 June 2016, the proforma effects of the Proposed Rights Issue on the NA per share and gearing of the Group are as follows:Minimum Scenario Audited as at 30 June 2016 (RM’000)
After the Proposed Rights Issue (RM’000)
4,423,627 12,571,579 (24,487) 1,003,046 (11,669) 17,454 (8,440,152) 6,345,687 15,885,085
5,526,431 12,990,644 (24,487) 1,003,046 (11,669) 17,454 (8,440,152) (2)6,344,687 17,405,954
No. of ordinary shares (’000)(1) NA per share (RM)
4,411,215 3.60
5,514,019 3.16
Net borrowings (net of cash and cash equivalents) Net gearing ratio (x)
2,175,047 0.14
(3)653,177
Share capital Share premium Treasury share Foreign currency translation reserve Cash flow hedge reserve Share-based payment reserve Reorganisation debit balance Retained earnings Shareholders’ equity / NA
(3)0.04
Notes:(1) Excluding 12,411,500 treasury shares as at the LPD. (2) After deducting the estimated expenses of RM1,000,000 in relation to the Proposed Rights Issue. (3) The Company is in the midst of procuring bank borrowings which will be utilised for settlement of the Tender Consideration. Strictly for illustration purposes, after taking into consideration the Tender Consideration is fully funded via bank borrowings, the illustrative net gearing ratio of the Group will be 0.48x (including effects of the Proposed Rights Issue).
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Maximum Scenario
Audited as at 30 June 2016 (RM’000)
(I) subsequent adjustment (RM’000)
(II) After (I) and the Proposed Rights Issue (RM’000)
4,423,627 12,571,579 (24,487) 1,003,046 (11,669) 17,454 (8,440,152) 6,345,687 15,885,085
4,457,127 12,630,908 (24,487) 1,003,046 (11,669) (8,440,152) 6,345,687 15,960,460
5,568,306 13,053,156 (24,487) 1,003,046 (11,669) (8,440,152) (2)6,344,687 17,492,887
No. of ordinary shares (’000)(1) NA per share (RM)
4,411,215 3.60
4,444,715 3.59
5,555,894 3.15
Net borrowings (net of cash and cash equivalents) Net gearing ratio (x)
2,175,047 0.14
2,099,672 0.13
(4)566,245
(3)After
Share capital Share premium Treasury share Foreign currency translation reserve Cash flow hedge reserve Share-based payment reserve Reorganisation debit balance Retained earnings Shareholders’ equity / NA
(4)0.03
Notes:(1) Excluding 12,411,500 treasury shares as at the LPD. (2) After deducting the estimated expenses of RM1,000,000 in relation to the Proposed Rights Issue. (3) Assuming all 33,500,000 outstanding exercisable ESOS Options as at the LPD are exercised prior to the Entitlement Date at an exercise price of RM2.25 per share. (4) The Company is in the midst of procuring bank borrowings which will be utilised for settlement of the Tender Consideration. Strictly for illustration purposes, after taking into consideration the Tender Consideration is fully funded via bank borrowings, the illustrative net gearing ratio of the Group will be 0.48x (including effects of the Proposed Rights Issue).
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4.4
Substantial shareholders’ shareholdings The substantial shareholders of IOIPG as at the LPD and the proforma effects of the Proposed Rights Issue on their shareholdings in IOIPG are as follows:Minimum Scenario As at the LPD
Substantial shareholders TSDLSC Puan Sri Datin Hoong May Kuan (“PSDHMK”) DLYC LYS VCSB Progressive Holdings Sdn Bhd (“PHSB”) Summervest Employees Provident Fund Board (“EPF”)
Direct No. of IOIPG Shares (’000)
(1)%
39,568 5,110 2,210 2,249,006 373,870 222,350
0.90 0.12 0.05 50.98 8.48 5.04
Indirect No. of IOIPG Shares (’000) (2)2,630,196 (3)2,669,764 (4)2,249,006 (4)2,249,006
(5)2,249,006 -
(1)%
After the Proposed Rights Issue Direct Indirect No. of IOIPG No. of IOIPG Shares Shares (1)% (’000) (’000)
59.63 60.52 50.98 50.98 50.98 -
49,460 6,388 2,763 2,811,258 467,337 277,938
0.90 0.12 0.05 50.98 8.48 5.04
(2)3,287,745 (3)3,337,205 (4)2,811,258 (4)2,811,258
(5)2,811,258
-
(1)%
59.63 60.52 50.98 50.98 50.98 -
Notes:(1) Excluding 12,411,500 treasury shares held as at the LPD. (2) Deemed interested by virtue of his interests in PHSB, which in turn holds 100% equity interest in VCSB and shares held by his sons, DLYC and LYS and shares held by Summervest under Section 6A of the Companies Act, 1965 (“Act”). (3) Deemed interested by virtue of her interest and the interests of her spouse, TSDLSC and her sons, DLYC and LYS in PHSB, which in turn holds 100% equity interest in VCSB and shares held by TSDLSC, DLYC, LYS and Summervest under Section 6A of the Act. (4) Deemed interested by virtue of his interest in PHSB, which in turn holds 100% equity interest in VCSB under Section 6A of the Act. (5) Deemed interested by virtue of its interest in its wholly-owned subsidiary, VCSB under Section 6A of the Act.
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Maximum Scenario As at the LPD
Substantial shareholders TSDLSC PSDHMK DLYC LYS VCSB PHSB Summervest EPF
Substantial shareholders TSDLSC PSDHMK DLYC LYS VCSB PHSB Summervest EPF
Direct No. of IOIPG Shares (’000)
(1)%
39,568 5,110 2,210 2,249,006 373,870 222,350
0.90 0.12 0.05 50.98 8.48 5.04
Indirect No. of IOIPG Shares (’000) (2)
2,630,196
(3)2,669,764 (4)2,249,006 (4)2,249,006
(5)2,249,006 -
(II) After (I) and the Proposed Rights Issue Direct Indirect No. of IOIPG No. of IOIPG Shares Shares (’000) % (’000) 56,335 6,388 9,013 2,811,258 467,337 277,938
1.01 0.11 0.16 50.60 8.41 5.00
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(2)3,293,995 (3)3,350,330 (4)2,811,258 (4)2,811,258
(5)2,811,258
-
(1)%
59.63 60.52 50.98 50.98 50.98 -
% 59.29 60.30 50.60 50.60 50.60 -
(I) Assuming full exercise of the outstanding exercisable ESOS Options Direct Indirect No. of IOIPG No. of IOIPG Shares Shares (’000) % (’000) 45,068 5,110 7,210 2,249,006 373,870 222,350
1.01 0.11 0.16 50.60 8.41 5.00
(2)
2,635,196
(3)2,680,264 (4)2,249,006 (4)2,249,006
(5)2,249,006
-
%
59.29 60.30 50.60 50.60 50.60 -
Notes:(1) Excluding 12,411,500 treasury shares held as at the LPD. (2) Deemed interested by virtue of his interests in PHSB, which in turn holds 100% equity interest in VCSB and shares held by his sons, DLYC and LYS and shares held by Summervest under Section 6A of the Act. (3) Deemed interested by virtue of her interest and the interests of her spouse, TSDLSC and her sons, DLYC and LYS in PHSB, which in turn holds 100% equity interest in VCSB and shares held by TSDLSC, DLYC, LYS and Summervest under Section 6A of the Act. (4) Deemed interested by virtue of his interest in PHSB, which in turn holds 100% equity interest in VCSB under Section 6A of the Act. (5) Deemed interested by virtue of its interest in its wholly-owned subsidiary, VCSB under Section 6A of the Act.
4.5
Convertible securities Save for the outstanding ESOS Options, the Company does not have any other outstanding convertible securities as at the LPD. Adjustments to the exercise price and number of outstanding ESOS Options arising from the Proposed Rights Issue will be determined based on the by-laws governing the ESOS.
5.
APPROVALS REQUIRED AND CONDITIONALITY The Proposed Rights Issue is subject to the following approvals being obtained:(i)
the approval of Bursa Malaysia Securities Berhad for the listing of and quotation for the Rights Shares to be issued pursuant to the Proposed Rights Issue;
(ii)
the approval of shareholders of IOIPG at an extraordinary general meeting to be convened for the Proposed Rights Issue; and
(iii)
any other relevant authorities and/or parties, if required.
The Proposed Rights Issue is not inter-conditional with or conditional upon any other corporate exercise undertaken or to be undertaken by IOIPG.
6.
DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS None of the directors, major shareholders and/or persons connected with them has any interest, either direct or indirect, in the Proposed Rights Issue beyond their respective entitlements under the Proposed Rights Issue for which all shareholders of IOIPG are similarly entitled to, including the right to apply for excess Rights Shares.
7.
DIRECTORS’ STATEMENT The Board, after having considered all aspects of the Proposed Rights Issue, is of the opinion that the Proposed Rights Issue is in the best interest of the Company.
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ADVISER AmInvestment Bank has been appointed as the Principal Adviser for the Proposed Rights Issue.
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9.
APPLICATION TO THE RELEVANT AUTHORITIES Barring any unforeseen circumstances, the applications to the relevant authorities in relation to the Proposed Rights Issue are expected to be submitted within two (2) months from the date of this announcement.
10.
EXPECTED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposed Rights Issue is expected to be completed by first (1st) quarter of calendar year 2017.
This announcement is dated 18 November 2016.
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