Bursa Announcements News

Proposed Renounceable Rights Issue Of Up To 267,696,915 Warrants In Gamuda ("Warrant(s)"), At An Issue Price Of RM0.10 Per warrant On The Basis of One (1) Warrant For Every Eight (8) Existing Ordinary Shares Of RM1.00 Each Held In Gamuda ("Share(s)") At An Entitlement Date To Be Determined Later ("Entitlement Date") ("Proposed Rights Issue Of Warrants")

Dec 22, 2009
Date Announced
:
 22/12/2009  




Type
:
 Announcement
Subject
:
GAMUDA BERHAD ("GAMUDA" OR THE “COMPANY")

PROPOSED RENOUNCEABLE RIGHTS ISSUE OF UP TO 267,696,915 WARRANTS IN GAMUDA (“WARRANT(S)”), AT AN ISSUE PRICE OF RM0.10 PER WARRANT ON THE BASIS OF ONE (1) WARRANT FOR EVERY EIGHT (8) EXISTING ORDINARY SHARES OF RM1.00 EACH HELD IN GAMUDA (“SHARE(S)”) AT AN ENTITLEMENT DATE TO BE DETERMINED LATER (“ENTITLEMENT DATE”) (“PROPOSED RIGHTS ISSUE OF WARRANTS”)

Contents
:
1. INTRODUCTION

On behalf of the Board of Directors of Gamuda (“Board”), AmInvestment Bank Berhad (a member of AmInvestment Bank Group) (“AmInvestment Bank”) wishes to announce that the Company is proposing to undertake a renounceable rights issue of up to 267,696,915 Warrants at an issue price of RM0.10 per Warrant on the basis of one (1) Warrant for every eight (8) existing Shares held at Entitlement Date.

Gamuda intends to request its substantial shareholders to provide written irrevocable undertakings to subscribe in full or procure the subscription in full of its / their entitlements to the Warrants as at the Entitlement Date and/or excess applications not taken up by Entitled Shareholders (as defined hereinunder) (“Undertaking”). As such, underwriting arrangements for the Proposed Rights Issue Of Warrants, if any, will depend on the extent of the Undertakings to be obtained.

Announcement Details :

2. THE PROPOSED RIGHTS ISSUE OF WARRANTS

2.1 Details of the Proposed Rights Issue Of Warrants      

    The Proposed Rights Issue Of Warrants is to be implemented on a renounceable basis of one (1) Warrant for every eight (8) existing Shares held on the Entitlement Date at an issue price of RM0.10 per Warrant.          
    The final number of Warrants to be issued pursuant to the Proposed Rights Issue Of Warrants will be determined at a later date after taking into consideration the possible enlarged share capital of Gamuda arising from the exercise of: -

    (a) the total number of Gamuda’s existing 67,728,000 outstanding Employees’ Share Option Scheme (“ESOS”) options which have been granted as at 17 December 2009 (“Outstanding Granted ESOS Options”) having been exercised as at that date; and (b) an additional of up to 57,085,210 ESOS options that may be granted and exercisable pursuant to Gamuda’s ESOS (“Outstanding Non-granted ESOS Options”) having been exercised as at that date.     
    The Warrants will be provisionally allotted and issued to the shareholders of Gamuda whose names appear on the Record of Depositors of the Company on the close of business on the Entitlement Date to be announced later by the Company (“Entitled Shareholders”). 
    The Entitled Shareholders can fully or partially renounce their entitlements for the Warrants. Any unsubscribed Warrants shall be offered to other Entitled Shareholders under excess applications. It is the intention of the Board to allocate excess Warrants in a fair and equitable manner on a basis to be determined by the Board and announced later by the Company. Fractional entitlements under the Proposed Rights Issue Of Warrants, if any, will be dealt with in such manner as the Board in its absolute discretion deems fit and in the best interest of the Company.  
    The indicative salient terms of the Warrants are set out in Table 1 below.   
    2.2 Basis of determining the issue price and exercise price of the Warrants     
    The issue price of RM0.10 per Warrant was arrived at after taking into consideration various market information including the five (5)-day weighted average market price (“WAMP”) of Gamuda Shares up to and inclusive 21 December 2009 of RM2.67, and the historical volatility of the underlying Gamuda Shares.     
    The final exercise price of the Warrants shall be determined by the Board after receipt of all relevant approvals but before the Entitlement Date, after taking into consideration the five (5)-day WAMP of Gamuda Shares preceding the price-fixing date to be determined by the Board.

2.3 Shareholders’ Undertaking and underwriting arrangement      
    As mentioned in Section 1, Gamuda intends to request its substantial shareholders to provide Undertakings. As such, underwriting arrangements for the Proposed Rights Issue Of Warrants, if any, will depend on the extent of the Undertakings to be obtained.    
    In the event underwriting arrangements are required for the open portion of Warrants as well as Warrants for which the Company is unable to procure written irrevocable undertakings, an underwriting agreement will be executed in due course.

2.4 Ranking of new Shares arising from exercise of Warrants      
    The new Shares to be issued pursuant to the exercise of the Warrants shall, upon issue and allotment, rank pari passu in all respects with the then existing Shares of the Company, except that they shall not be entitled to any dividends, rights, allotments and/or distributions, the entitlement date of which is prior to the allotment date of the new Shares arising from the exercise of the Warrants.

2.5 Utilisation of proceeds     
    The Proposed Rights Issue Of Warrants will raise gross proceeds of up to approximately RM26.8 million to be utilised as working capital and to defray expenses relating to the Proposed Rights Issue Of Warrants.    
    The exact quantum of proceeds that may be raised by Gamuda from the exercise of the Warrants would depend upon the actual number of the Warrants exercised, and the final exercise price of the Warrants. The proceeds from the exercise of the Warrants will be received on an “as and when basis” over the tenure of the Warrants.

    Based on the indicative exercise price of RM2.67 per Warrant, the Company will raise gross proceeds of up to RM714.8 million from the full exercise of the Warrants. Any proceeds arising from any potential exercise of Warrants in the future will be used for capital expenditure and investment opportunities in the related businesses of Gamuda and its subsidiaries (“Gamuda Group” or the “Group”), repayment of borrowings and/or working capital purposes.

2.6 Adjustments to ESOS      
    Any necessary adjustments to the existing ESOS options as a result of the Proposed Rights Issue Of Warrants will be made in accordance with the provisions of the bye-laws governing the ESOS. Any necessary adjustments arising from the Proposed Rights Issue Of Warrants in relation to the outstanding ESOS options will only be finalised on the Entitlement Date.


3. RATIONALE FOR THE PROPOSED RIGHTS ISSUE OF WARRANTS 
    The Proposed Rights Issue Of Warrants will provide the Company with additional capital when the Warrants are exercised in the future. The exercise of the Warrants will allow the Company to obtain proceeds without incurring additional interest expenses and minimize any potential cash outflow in respect of interest servicing. In addition, the exercise of the Warrants will increase Gamuda’s shareholders’ funds / capital base and hence improve its gearing levels for a more optimal capital structure.  
    Existing shareholders of Gamuda will be provided the option to further increase equity participation in the Company at a pre-determined price over the tenure of the Warrants. The Proposed Rights Issue Of Warrants will involve the issuance of new Shares without diluting existing shareholders' equity interest PROVIDED THAT all Entitled Shareholders subscribe for their respective entitlements and exercise their Warrants subsequently.


4. FINANCIAL EFFECTS OF THE PROPOSED RIGHTS ISSUE OF WARRANTS

4.1 Share capital      
    The proforma effects of the Proposed Rights Issue Of Warrants on the issued and paid-up share capital of the Company are detailed in Table 2 below.

4.2 Substantial shareholders’ shareholdings      
    The Proposed Rights Issue Of Warrants will not have any effect on the shareholdings of the substantial shareholders of Gamuda. Notwithstanding this, the effect on the shareholdings of the substantial shareholders of Gamuda arising from the exercise of the Warrants will depend upon, amongst others, the subscription of their respective entitlements under the Proposed Rights Issue Of Warrants as well as the number of Warrants exercised by the substantial shareholders as well as the other holders of the Warrants.

4.3 Earnings and earnings per Share (“EPS”)     
    The Proposed Rights Issue Of Warrants is not expected to have an immediate material effect on the earnings and EPS of Gamuda until such time when the Warrants are exercised. The potential effect of the exercise of the Warrants on the future earnings and EPS of Gamuda will depend upon, amongst others, the number of Warrants exercised at any point in time and utilisation of proceeds arising from the exercise of the Warrants.

    Although the exercise of the Warrants is expected to immediately dilute the consolidated EPS of Gamuda as a result of the increase in the number of Gamuda Shares in issue, over time, the utilisation of proceeds raised from the exercise of Warrants is expected to contribute positively to the future earnings of the Gamuda Group.

4.4 Net assets ("NA") and gearing     
    Based on the latest audited results of Gamuda for the financial year ended 31 July 2009, the proforma effects of the Proposed Rights Issue Of Warrants on the consolidated NA per Share and gearing are detailed in Table 3 below.

4.5 Dividends    
    The Company declared a first interim dividend of 4% less 25% taxation paid on 3 February 2009 and second interim dividend of 4% less 25% taxation paid on 18 August 2009 for the financial year ended 31 July 2009. The Board did not recommend the payment of any final dividend in respect of the financial year ended 31 July 2009.    
    Barring any unforeseen circumstances, the Company does not expect the Proposed Rights Issue Of Warrants to affect the quantum of dividends to be paid by the Company for the financial year ending 30 June 2010. However, the level of dividends to be declared for future financial years would be determined by the Board after taking into consideration the performance, cash flow position and financial requirements of the Gamuda Group as well as prevailing economic conditions, after taking into consideration the number of Shares in issue as a result of the exercise of the Warrants, and the exercise of the Company’s outstanding ESOS options.


5. APPROVALS REQUIRED 

          The Proposed Rights Issue Of Warrants is subject to the following approvals being obtained:-  

    (a) the approval of Bursa Malaysia Securities Berhad (“Bursa Securities”) for the admission of the Warrants to the Official List of Bursa Securities, and the listing of and quotation for the Warrants and new Shares to be issued pursuant to the exercise of the Warrants on the Main Market of Bursa Securities; (b) the approval of the shareholders of Gamuda at an Extraordinary General Meeting to be convened for the Proposed Rights Issue Of Warrants; (c) the approval of the Controller of Foreign Exchange, Bank Negara Malaysia, for the issuance of Warrants to non-resident shareholders of Gamuda pursuant to the Proposed Rights Issue Of Warrants; and (d) the approval of any other authorities/parties, if required.


6. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTEREST  
    None of the Directors and/or major shareholders of Gamuda and persons connected with the Directors and/or major shareholders of Gamuda have any interest, either direct or indirect, in the Proposed Rights Issue Of Warrants beyond their respective entitlements under the Proposed Rights Issue Of Warrants for which all shareholders of Gamuda are similarly entitled to, including the right to apply for excess applications.


7. BOARD OF DIRECTORS’ STATEMENT 
    The Board, having considered the current and prospective financial position and capacity of Gamuda and after careful deliberation and taking into consideration the rationale of the Proposed Rights Issue Of Warrants, is of the opinion that the Proposed Rights Issue Of Warrants is in the best interest of Gamuda and its shareholders.


8. APPLICATION TO THE RELEVANT AUTHORITIES 
    Applications to the relevant authorities are expected to be submitted within two (2) months from the date of this announcement.


9. ADVISER  
    AmInvestment Bank has been appointed as Adviser for the Proposed Rights Issue Of Warrants.


10. ESTIMATED TIMEFRAME FOR COMPLETION 
    Barring any unforeseen circumstance, the Board expects the Proposed Rights Issue Of Warrants to be completed by the first half of calendar year 2010.


This announcement is dated 22 December 2009.

Attachments

  1. GAMUDA221209.doc (Size: 121,344 bytes)