BCorp to make RM767m cash call to fund Cosway purchase

KUALA LUMPUR: Berjaya Corp Bhd (BCorp) is making a cash call to raise some RM767 million to finance the privatisation of Hong Kong-listed Cosway Corp Ltd and to pare down borrowings.

BCorp has proposed a rights issue of up to RM767.49 million nominal value of new irredeemable convertible unsecured loan stocks (Iculs) together with up to 767.49 million units of warrants.

The fundraising exercise will be done on the basis of one RM1 nominal value of new Iculs together with one warrant for every six BCorp shares held at a time and date to be determined later by the board as the entitlement date.

The rights issue of Iculs and the proposed privatisation of Cosway are inter-conditional upon each other, both of which are subject to BCorp’s shareholders’ approval.

“The new Iculs would provide the entitled shareholders of the company an attractive annual yield while the warrants act as a ‘sweetener’ to the shareholders of the company as it is a 10 year option to further increase their participation in the equity of the company at an attractive predetermined price,” said BCorp.

The company also proposed an exemption to Tan Sri Vincent Tan and persons acting in concert with him from the obligation to undertake a mandatory takeover offer for all the BCorp shares, existing Iculs, new Iculs and warrants not already owned by him and those acting in concert.

According to the company’s announcement, Tan has irrevocably undertaken to subscribe in full for his entitlement of the new Iculs with warrants as at the entitlement date.

“He has also undertaken to procure his private companies, namely B & B Enterprise Sdn Bhd, HQZ Credit Sdn Bhd, Lengkap Bahagia Sdn Bhd, Nautilus Corp Sdn Bhd, Hotels Resorts Enterprise Sdn Bhd (HRE), Nostalgia Kiara Sdn Bhd, Desiran Unggul Sdn Bhd, Premier Merchandise Sdn Bhd, Superior Structure Sdn Bhd and 7-Eleven Malaysia Sdn Bhd to irrevocably undertake to subscribe in full for their respective entitlements of the new Iculs with warrants as at the entitlement date,” said BCorp.

As at Sept 13, Tan directly held 827.47 million BCorp shares, representing 19.8% equity interest, while his private companies directly hold 799,573,632 BCorp shares, representing a 19.13% stake.

Collectively Tan and his private companies will be entitled to RM271.2 million nominal value of new Iculs with 271.2 million warrants.

This exercise is not expected to have any material effect on the group’s earnings for FY12 ending April 30 as the proposed rights issue is only expected to be completed in 1QCY12.

For FY11 ended April 30, BCorp’s net profit expanded to RM348 million from RM79.9 million. Revenue came in at RM7.11 billion against RM6.75 billion for FY10. As at April 30, the group’s cash balance was at RM596.9 million, while borrowings amounted to RM1.66 billion.