DPS proposes 80% capital reduction, rights shares and free warrants

DPS proposes 80% capital reduction, rights shares and free warrants
Business & Markets 2013
Written by Ho Wah Foon of theedgemalaysia.com
Friday, 13 September 2013 19:52

KUALA LUMPUR (Sept 13): DPS RESOURCES BHD [] today proposed an 80% reduction of its issued and paid-up share capital via the cancellation of RM0.40 of the par value of each existing share of RM0.50 each to RM0.10 each.

In addition, it also proposed to issue renounceable rights issue of up to 660 million new DPS shares (rights shares) on the basis of two rights for every one existing DPS share held, together with up to 396 million free detachable warrants (rights warrants) on the basis of three rights warrants for every five rights shares subscribed.

In a statement to Bursa Malaysia, the company said it has also proposed diversification of its principal activities to include property development.

In the same statement, it announced several joint ventures in property development.

On the rationale for capital reduction, DPS said: “This will result in a credit which will be utilised to fully set-off against the accumulated losses of the company and the remaining balance will be credited to other reserve of the company.”

The proposed par value reduction will result in a minimum credit of RM105.6 million and maximum RM132 million, which will be utilised to set-off against DPS’ accumulated losses at RM57.71 million as at 31 March 2013.

The remaining balance of RM47.8 million (minimum) or RM74.2 million (maximum) will be credited to other reserve of the company, it said.

As the market price of the DPS shares has been below its par value since 2008, the cancellation of RM0.40 from the par value of the existing DPS shares of RM0.50 each to RM0.10 each will potentially reduce the gap between the market price of the DPS share and its par value, added DPS.