Silver Bird announces regularisation plan

by **Cals** Tue 15 Oct 2013, 09:14

Posted on 15 October 2013 - 05:40am

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PETALING JAYA (Oct 15, 2013): Financially troubled Silver Bird Group Bhd has announced a regularisation plan involving a proposed 10-into-1 capital reduction and a fund raising exercise comprising a rights issue to remove it from the list of Practice Note 17 (PN17) status' companies.

The PN17 criteria was triggered due to Silver Bird's auditors expressing a disclaimer of opinion on the bread and confectionary maker's audited accounts for the financial year ended Oct 31, 2011 (FY11) and a default in payment by its major subsidiaries.

Under the regularisation plan, Silver Bird is proposing a capital reduction exercise involving the cancellation of 49 sen of its 50 sen par value share into 1 sen each, and the consolidation of every 10 shares of 1 sen each into one share of 10 sen each.

It has an issued and paid-up share capital of RM203.34 million comprising 406.68 million 50 sen shares now.

The capital reduction exercise will reduce its paid-up capital to RM4.07 million, giving rise to a credit of RM199.27 million that will be used to reduce the accumulated losses of the group.

Silver Bird also intends to settle outstanding indebtedness with several creditors totalling RM431.95 million as well as proposed the liquidation of eight subsidiaries, which will enable the group to focus wholly on its essential operating subsidiary companies.

In its fund raising exercise, Silver Bird is proposing a renounceable rights issue of 626.29 million new shares at an indicative issue price of 10 sen per rights share, with up to 626.29 million free detachable warrants on the basis of 154 rights shares together with 154 warrants for every 10 Silver Bird shares.

"The proposed rights issue with warrants will enable the group to repay its creditors as well as provide funds for working capital and to defray the expenses of the proposed regularisation plan," said Silver Bird in a filing with Bursa Malaysia yesterday.

In addition, Silver Bird is proposing to establish and implement an employee stock option scheme (Esos) of up to 125.09 million new shares, based on 10% of the enlarged share capital of the group, after the proposed regularisation plan.

"(This is) to encourage eligible employees as the proposed Esos will allow them to participate directly in the equity of Silver Bird and to reward and retain the 25 employees whose services are deemed essential to the continued growth of Silver Bird Group," it said.

Silver Bird said submission of the proposed regularisation plan to Bursa Securities will be by Nov 30, 2013.

It added that the proposed regularisation plan is not expected to have any material effect on the earnings and earnings per share of the group for the financial year ending Oct 31, 2013 (FY13) as it is expected to be completed only in the second quarter of 2014.

Upon implementation of the proposed regularisation plan, the group's total conventional loans is expected to be less than 33% of the total assets, hence the group will be reclassified as a non-syariah compliant counter on Nov 29, 2013.

Inter-Pacific Securities Sdn Bhd is the principal adviser for the proposed regularisation plan.