MAIN Market-listed tourism-oriented property developer Yong Tai Bhd is undertaking multiple corporate exercises consisting of share consolidation, bonus issue of warrants and debt settlements to strengthen its equity base and balance sheet while tapping prospect of the post-COVID recovery.
In a filing with Bursa Malaysia, the group said it has proposed a share consolidation of every five shares in the company into one share, and a bonus issue of up to 103.1 million free warrants on the basis of one warrant for every four consolidated shares.
Following the consolidation of its shares, the group also proposed to enter into a debt settlement of its RM46 mil owing to 19 creditors via the issuance of 92 million new shares at 50 sen per share in order to strengthen its capital structure and balance sheet.
On the proposed bonus issue of warrants, Yong Tai’s stock exchange filing said the exercise would, among others, enable the company to participate in its convertible securities which are tradable on the Main Market of Bursa Malaysia without incurring any cost while allowing existing shareholders to benefit from any potential capital appreciation of its warrants.
“We think that the proposed corporate exercises will help to provide some stability in our share prices following a difficult period during the COVID-19 pandemic,” Yong Tai’s CEO and executive director Datuk Wira Boo Kuang Loon pointed out.
“The proposed share consolidation is vital to reduce volatility in the company’s share price. It also helps to increase the reference price and enhance Yong Tai’s profile among investors. This will be vital for the group as we move towards a post-COVID recovery phase.”
Yong Tai has borne the brunt of the COVID-19 pandemic alongside the lockdown imposed globally to contain the spread of infection given its exposure to the property development and the tourism industry. This has led to sharp losses and a decline in its share prices over the last two years.
However, with the re-opening of the economy, Yong Tai wants to regain its mojo by focusing on re-opening of its Encore Melaka theatre and completing its on-going property development project.
Moreover, its gold mining business which has started the exploration stage will see production commencing in phases, hence expected to contribute positively to the group’s earnings going forward.
On its debt capitalisation proposal, Boo expects the debt settlement of RM46 mil via issuance of new Yong Tai shares to help strengthen the group’s balance sheet and cash flow in the near future. “This is important given the rising interest environment as well as the ability for the management to focus on the recovery phase,” he justified.
“The creditors are also not taking any discount from the issuance of new shares but it is based on the prevailing market price. This highlights the confidence that our suppliers, business associates and contractors have in the recovery moving forward.”
He added: “With the structural disadvantages due to the pandemic being gradually removed, we are confident of being able to recover over the next six to 12 months quickly.”
At the close of today’s trading, Yong Tai was down 1.5 sen or 15% to 8.5 sen with 136.14 million shares traded, thus valuing the company at RM119 mil. – May 18, 2022
