Ekovest plans rights issue for DUKE stake buy

by **Cals** Wed 29 Jan 2014, 18:23

Business & Markets 2014

Written by Chong Jin Hun of theedgemalaysia.com

Wednesday, 29 January 2014 14:39

KUALA LUMPUR (Jan 29): Ekovest Bhd is planning a renounceable rights issue of 244.41 million new shares in the company to finance its planned acquisition of the remaining 30% stake in the 18km Duta-Ulu Kelang Expressway (DUKE) for RM228 million cash.

In a statement to the exchange, Ekovest which already owns 70% of the DUKE, said it is buying the stake from Malaysian Resources Corp Bhd.

Ekovest said the "proposed rights issue with warrants is undertaken to raise funds which will be utilised to inter-alia satisfy the balance purchase consideration for the proposed acquisition".

"The board proposes to fund the proposed acquisition via the proposed rights issue with warrants as opposed to via bank borrowings in order to avoid substantial interest expense," Ekovest said.

Ekovest said the rights issue will be done on the basis of two rights units and one free warrant for every five existing Ekovest shares held. The exercise involves 122.21 million free warrants.

Ekovest also intends to split its shares. The company plans to divide each unit with a par value of RM1 into two shares of 50 sen each.

The firm said while the share split will have no impact on its market capitalisation, the exercise is expected to adjust the stock's price.

"Having considered that the shares have been trading at an average price of RM2.82 for the past three months up to and including the LPD (latest practicable date), the proposed share split is expected to increase the liquidity of Ekovest shares as traded on the Main Market of Bursa Securities which in turn is expected to increase the appeal of Ekovest shares to a wider group of shareholders and investors," Ekovest said.

Ekovest expects to finalise the corporate exercises by the third quarter of this year.