SOLUTION ENGINEERING HOLDINGS BERHAD ( SOLUTION OR THE COMPANY )

Transcription

1 SOLUTION ENGINEERING HOLDINGS BERHAD ( SOLUTION OR THE COMPANY ) (I) (II) PROPOSED BONUS ISSUE PROPOSED AMENDMENTS 1. INTRODUCTION On behalf of the Board of Directors of Solution ( Board ), OSK Investment Bank Berhad ( OSK ) wishes to announce that the Company is proposing to undertake the following: (i) (ii) proposed bonus issue of 42,174,000 new ordinary shares of RM0.10 each in Solution ( Solution Share(s) or Share(s) ) ( Bonus Share(s) ) on the basis of one (1) Bonus Share for every three (3) existing Solution Shares held at a date to be determined and announced later ( Entitlement Date ) ( Proposed Bonus Issue ); and proposed amendments of the Memorandum and Articles of Association of Solution ( Proposed Amendments ). (Collectively to be referred to as the Proposals ) 2. DETAILS OF THE PROPOSED BONUS ISSUE 2.1 Basis and number of Bonus Shares The Proposed Bonus Issue will entail the issuance of 42,174,000 Bonus Shares to be credited as fully paid-up on the basis of one (1) Bonus Share for every three (3) existing Solution Shares held by the entitled shareholders of the Company whose name appear in the Record of Depositors of the Company as at the close of business on an entitlement date to be determined and announced later ( Entitlement Date ). Any fractional entitlements of Bonus Shares shall be dealt with in such manner as the Board in its absolute discretion deems fit, expedient and in the best interest of the Company. The Proposed Bonus Issue is not intended to be implemented on a staggered basis over a period of time. 2.2 Capitalisation of reserves The Proposed Bonus Issue will be effected by capitalising the share premium and retained profits of Solution amounting to RM4,217,400 in the following manner: Company level As at 31 December 2010 (being the latest quarterly financial result of Solution) Less: Amount to be capitalised for the Proposed Bonus Issue Share premium Retained profits Total 4, ,328 (3,974) (243) (4,217) Less: Estimated expenses for the Proposals (80) - (80) Balance after the Proposed Bonus Issue

2 The Board has confirmed that based on the latest unaudited accounts of Solution for the financial year ended 31 December 2010: (i) (ii) the reserves required for capitalisation of the bonus issue are unimpaired by losses in accordance to paragraph 6.31(1) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad ( Listing Requirements ) ( Bursa Securities ); and the Company will have adequate reserves to cover the capitalisation required for the Proposed Bonus Issue, in accordance with paragraph 6.31(3) of the Listing Requirements. Messrs Wong Weng Foo & Co, the Company s external auditors, has confirmed that Solution has sufficient retained earnings to be capitalised for the Proposed Bonus Issue. 2.3 Ranking of the Bonus Shares The Bonus Shares shall, upon allotment and issue, rank pari passu in all respects with the existing Shares save and except that they will not be entitled to any dividends, rights, allotments and/or distributions which may be declared, made or paid to shareholders, of which the entitlement date is prior to the date of allotment of the Bonus Shares. 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 ACE Market of Bursa Securities. 3. DETAILS OF THE PROPOSED AMENDMENTS The Company is proposing to amend its Articles of Association to comply with Chapter 7 of the ACE Market Listing Requirements. Details of the Proposed Amendments will be disclosed in the circular to shareholders to be issued on a later date. 4. RATIONALE FOR THE PROPOSALS 4.1 Proposed Bonus Issue The Proposed Bonus Issue is intended to reward the existing entitled shareholders for their continued support to Solution and its subsidiaries ( Solution Group ). The Board views the Proposed Bonus Issue as a suitable avenue to reward the shareholders by enabling them to have greater participation in the equity of the Company and to enhance the marketability and trading liquidity of the Shares on Bursa Securities. The Board also hopes that the liquidity and marketability of Solution Shares would improve with a larger issued and paid-up share capital base. 4.2 Proposed Amendments The Proposed Amendments are to ensure that the Articles of Association of Solution is in compliance with Chapter 7 of the ACE Market Listing Requirements. 2

3 5. INTER-CONDITIONALITY The Proposed Bonus Issue is not conditional upon any other proposal. The Proposed Amendment is not conditional upon any other proposal. 6. EFFECTS OF THE PROPOSALS The Proposed Amendments will not have any effect on the share capital, Net Assets ( NA ), gearing, earnings and substantial shareholders' shareholding of Solution. For illustrative purposes only, the proforma effects of the Proposed Bonus Issue on the share capital, NA and gearing, earnings and substantial shareholders shareholding of Solution are as follows: 6.1 Share capital The proforma effect of the Proposed Bonus Issue on the issued and paid-up share capital of the Company is as follows: No. of Solution Shares Issued and paid-up share capital as at 10 March ,522,000 12,652,200 To be issued pursuant to the Proposed Bonus Issue 42,174,000 4,217,400 Enlarged issued and paid-up share capital 168,696,000 16,869,600 RM 6.2 NA per Share and gearing For illustrative purposes only, based on the audited consolidated balance sheets of Solution as at 31 December 2009 and on the assumption that the Proposed Bonus Issue had been effected on that date, the proforma effects of the Proposed Bonus Issue on the NA per Share and gearing of the Solution Group are as follows: Audited as at 31 December 2009 After payment of dividend (1) After Proposed Bonus Issue RM RM RM Share capital 12,652,200 12,652,200 16,869,600 Share premium 4,053,532 4,053,532 - (2) Retained earnings 4,979,711 3,081,881 2,838,013 Shareholders fund/ NA 21,685,443 19,787,613 19,707,613 Minority interest 28,475 28,475 28,475 Total equity 21,713,918 19,816,088 19,736,088 No. of Shares in issue 126,522, ,522, ,696,000 NA per Share Total borrowings 2,256,399 2,256,399 2,256,399 Gearing 0.10 times 0.11 times 0.11 times Notes: (1) On 14 June 2010, Solution paid first interim tax-exempt dividend of 5% per Solution Share amounting to RM632,610 in respect of the financial year ended 31 December 2010 and on 24 December 2010, second interim tax-exempt dividend of 10% per Solution Share amounting to RM1,265,220 in respect of the financial year ended 31 December (2) After the amount to be capitalised for the Proposed Bonus Issue of approximately RM3.97 million and deducting estimated expenses in relation to the Proposals of approximately RM80,000. 3

4 6.3 Earnings per Share ( EPS ) Upon completion of the Proposed Bonus Issue, the future EPS of Solution would be diluted as a result of the increase in the number of Solution Shares arising from the Proposed Bonus Issue. 6.4 Substantial shareholders shareholdings The Proposed Bonus Issue will not have any effect on the percentage shareholdings of the substantial shareholders of Solution. However, the number of Solution Shares held by each substantial shareholder will increase proportionately as a result of the Proposed Bonus Issue. 7. APPROVALS REQUIRED The Proposals are subject to and conditional upon the following approvals being obtained from the following: (a) (b) (c) Bursa Securities, for the listing of and quotation for the 42,174,000 Bonus Shares on the ACE Market of Bursa Securities; shareholders of Solution, at the forthcoming annual general meeting; and any other relevant authorities and/or parties, if required. Barring any unforeseen circumstances, the application to Bursa Securities for the Proposals is expected to be submitted within two (2) months from the date of this announcement. 8. DIRECTORS AND MAJOR SHAREHOLDERS INTERESTS None of the Directors and/or major shareholders nor persons connected to them (as defined under the relevant provisions of the Listing Requirements) has any interest, direct or indirect, in the Proposals, save for their respective entitlements to the Proposed Bonus Issue pursuant to their respective shareholdings in Solution as at the Entitlement Date. 9. DIRECTORS STATEMENT The Board, after having considered all aspects of the Proposals, is of the opinion that the Proposals is in the best interest of the Company. 10. ADVISER OSK has been appointed as the Adviser to Solution for the Proposals. 11. AGM The shareholders approval for the Proposals would be sought at the forthcoming AGM. A circular to the shareholders of Solution together with the notice of AGM will be sent to the shareholders of Solution in due course. 4

5 12. ESTIMATED TIME FRAME FOR COMPLETION Barring any unforeseen circumstances, the Proposals are expected to be completed in the second quarter of the calendar year This announcement is dated 16 March