Hartalega plans 1-for-1 bonus issue

by **Cals** Wed 08 Jul 2015, 01:37

Hartalega plans 1-for-1 bonus issue

[You must be registered and logged in to see this image.]

By Sangeetha Amarthalingam / theedgemarkets.com | July 7, 2015 : 9:01 PM MYT

KUALA LUMPUR (July 7): Nitrile glove maker [size=14]Hartalega Holdings Bhd ([You must be registered and logged in to see this image.] Financial Dashboard), which has seen its share price climbing over 23% from the start of the year, has proposed a bonus issue of 820.4 million new shares on the basis of one bonus share for every existing share held by shareholders on an entitlement date to be fixed later.

In a filing with Bursa Malaysia today, Hartalega said the bonus issue was to raise its issued and paid-up share capital of the company to reflect its current scale and that of its subsidiaries.

“It also allows greater participation in the equity of the company in terms of the number of Hartalega shares held whilst maintaining the equity interest. It would (also) improve trading liquidity of shares on Bursa Securities ([You must be registered and logged in to see this image.]Financial Dashboard),” it said.

Hartalega said as at June 15, its issued and paid-up share capital was RM410.2 million comprising 820.4 million shares, while the bonus issue of 820.4 million shares does not take into account the 27.8 million outstanding options as at last purchase date pursuant to its existing employees’ share option (ESOS option).

It said the outstanding ESOS options are only exercisable as early as Dec 1 this year.

“As the proposed bonus issue is expected to be completed in the third quarter of 2015, no outstanding ESOS options could be exercised into new shares by then. Hence, it will have no impact on the actual bonus shares to be issued,” it said.

It added that the issuance of the bonus shares shall be capitalised from the company’s share premium account and retained earnings account.

To accommodate the bonus issuance, Hartalega (valuation: 0.5; fundamental: 2.6) also proposed to increase its authorised share capital to RM3 billion, made up of 6 billion shares from RM750 million with 1.5 billion shares.

Hartalega has appointed RHB Investment Bank as its adviser for the proposals.

It added that the proposed bonus issue is not expected to have any material effect on the earnings of the Hartalega for the financial year ending March 31, 2016.

But, assuming that its earnings remain unchanged, the earnings per share of the group will be proportionately diluted as a result of the increase in the number of Hartalega shares after the corporate exercise.

Its shares fell three sen or 0.34% to close at RM8.67 billion, giving it a market capitalisation of RM7.11 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

[/size]