MEXTER TECHNOLOGY BERHAD ("MEXTER" OR THE "COMPANY")
PROPOSED PRIVATE PLACEMENT AND ALLOCATION OF 22,363,005 NEW ORDINARY SHARES OF
RM0.10 EACH IN MEXTER, REPRESENTING 25% OF THE EXISTING ISSUED AND PAID-UP SHARE
CAPITAL OF MEXTER, TO TEKNOLOGIKA SERUMPUN SDN BHD, A COMPANY IN WHICH DATUK
AHMAD SHALIMIN BIN AHMAD SHAFFIE, THE CHAIRMAN/INDEPENDENT NON-EXECUTIVE
DIRECTOR OF MEXTER HAS A 50% EQUITY INTEREST, AT AN ISSUE PRICE TO BE DETERMINED
Alliance Investment Bank Berhad (“Alliance”), on behalf of the Board of Directors of Mexter
(“Board”), is pleased to announce that the Company wishes to undertake a proposed private
placement and allocation of 22,363,005 new ordinary shares of RM0.10 each in Mexter (“Mexter
Shares”)(“Placement Shares”), representing 25% of the existing issued and paid-up share capital of
Mexter, to Teknologika Serumpun Sdn Bhd (“TSSB”), a company in which Datuk Ahmad Shalimin
Bin Ahmad Shaffie, the Chairman/Independent Non-Executive Director of Mexter has a 50% equity
interest, at an issue price to be determined later.
The Proposal will not be implemented in tranches.
2. DETAILS OF THE PROPOSAL
2.1 Details of the identified placee
TSSB is a company incorporated in Malaysia under the Companies Act, 1965 on 12 April 2010.
The principal activities of the company are that of investment holding. The company has an
authorised share capital of RM1,000,000 comprising 1,000,000 ordinary shares of RM1.00 each,
and issued and paid-up share capital of RM10,000 comprising 10,000 ordinary shares of RM1.00
each as at 14 May 2010.
The directors of the company are Datuk Ahmad Shalimin Bin Ahmad Shaffie and Khairul Azwan Bin
Harun and they each hold 5,000 ordinary shares of RM1.00 each in the company respectively.
2.2 Basis of determining the issue price of the Placement Shares
The issue price of the Placement Shares shall be determined at a later date following the approval
from the shareholders of Mexter for the Proposal (“Price Fixing Date”), and shall be based on the
weighted average market price (“WAMP”) of Mexter’s shares for the five (5) market days
immediately prior to the Price Fixing Date, with a discount, if any, of not more than 10% of the
WAMP. In any event, the issue price shall not be lower than RM0.10, being the par value of Mexter
The WAMP of Mexter Shares for the last five (5) traded Market Days up to 20 May 2010 being the
latest practicable date prior to the date of this announcement was RM0.09, which is lower than the
par value of Mexter of RM0.10. For the purpose of illustration, we have assumed an indicative issue
price of RM0.10 per Placement Share.
2.3 Ranking of the Placement Shares
The Placement Shares shall, upon the allotment and issue, rank pari passu in all respects with the
existing Mexter Shares except that they shall not be entitled to participate in any dividends, rights,
allotments, and/or any other distributions that may be declared, made or paid where the “Record
Date” is prior to the date of allotment of the new Mexter Shares. “Record Date” means the date as at
the close of business on which shareholders of Mexter must be registered in the Record of
Depositors with Bursa Depository in order to participate in any dividends, rights, allotments or other
2.4 Listing of and quotation of the Placement Shares
Application will be made to Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of
and quotation for the Placement Shares on the ACE Market of Bursa Securities.
2.5 Proposed Allocation
Rule 6.07 of the Bursa Securities ACE Market Listing Requirements provides that a listed
corporation or any of its subsidiaries shall not issue shares or other convertible securities to a
Director, major shareholder, chief executive of the listed corporation or a holding company of the
listed corporation or person connected to the Director, major shareholder or chief executive unless
the shareholders have approved the specific allotment to them in a general meeting.
The Company proposes to allocate 22,363,005 Placement Shares to TSSB, a company in which
Datuk Ahmad Shalimin Bin Ahmad Shaffie, the Chairman/Independent Non-Executive Director of
Mexter has a 50% equity interest, at an issue price to be determined later.
Accordingly, the Proposal is subject to approval by the shareholders of the Company at the
forthcoming extraordinary general meeting (“EGM”).
3. UTILISATION OF PROCEEDS
Assuming the Placement Shares are issued at RM0.10 per Mexter Share, which represents the par
value of Mexter Shares, the Company is expected to raise approximately RM2.236 million. However,
the exact amount of gross proceeds to be raised is dependent on the actual issue price and the
actual number of Placement Shares to be issued, which will be determined at a later date.
The estimated gross proceeds raised will be used for the following purposes:
Expected timeframe for utilisation
Working capital 2,086 Within 18 months from the date of receipt
Estimated expenses for the 150^ Within 3 months from the date of receipt
1. Working capital
Mexter proposes to utilise the gross proceeds raised to fund the day-to-day operations of the Group,
comprising inter-alia, staff cost, insurance, rental, utilities (electricity, water and telephone), travelling
2. Estimated expenses in relation to the Proposal
Any variations to the actual amount raised or the actual expenses incurred for the Proposal from the
above estimated amounts will result in an adjustment of the same amount to the amount of proceeds
allocated for working capital.
4. RATIONALE FOR THE PROPOSAL
The Proposal will enable Mexter to raise funds for its working capital requirements without incurring
additional interest costs.
In this regard, the Board has decided that the Proposal would be the most appropriate manner to
raise new equity funds for Mexter after taking into account the following:
(i) present market conditions in which the company is operating in, current trading price of
Mexter Shares and the general liquidity of Mexter Shares, with due regard also to the
historical financial performance of the Mexter, its subsidiary and associated companies,
collectively (“Group”); and
(ii) the relatively shorter time and lower cost in implementing a private placement exercise
instead of other alternative equity fund raising modes such as a rights issue.
TSSB has agreed to participate in the Proposal with the objective of enabling the Company to raise
these funds for working capital requirements. Further, the Proposal will enable the Company to
strengthen its balance sheet position with enhanced shareholders’ funds, which will in turn reduce
the gearing level of the Group.
5. APPROVALS REQUIRED
The Proposal is subject to the following approvals being obtained:
(i) Bursa Securities for the listing of and quotation for the Placement Shares to be issued
pursuant to the Proposal;
(ii) The shareholders of Mexter at the forthcoming EGM to be convened for the Proposal; and
(iii) any other relevant authorities, if required.
Subsequent to all the approvals being procured above and the completion of the Proposal, Datuk
Ahmad Shalimin Bin Ahmad Shaffie shall be redesignated from being an Independent Non-
Executive Director to Non-Independent Non-Executive Director and shall remain as the Chairman
6. EFFECTS OF THE PROPOSAL
The proforma effects of the Proposal on share capital, substantial shareholders’ shareholdings, net
asset (“NA”), gearing and earnings are as follows:
6.1 Share capital
The proforma effects of the Proposal on the issued and paid-up share capital of Mexter are
set out below:
Mexter Shares RM
Issued and paid-up share 89,452,020 8,945,202
capital as at 14 May 2010
Assuming the allotment of the 15,973,575 1,597,358
special issue shares* is
completed prior to the date of
the allotment of the Placement
To be issued pursuant to the 22,363,005 2,236,300
Enlarged issued and paid-up 127,788,600 12,778,860
share capital after the
placement of the special issue
shares and Placement Shares
* Shareholders of Mexter had at an extraordinary general meeting held on 29 June 2009 approved
the issue and allotment of up to 30% of the enlarged issued and paid up share capital of Mexter
(after the private placement and special issue) as set out in the Circular to Shareholders dated 5
June 2009. In view of the liberalisation of the bumiputera equity requirement, Mexter shall only be
required to place out 12.5% of its enlarged share capital to bumiputera investors. The placement
of 12.5% of Mexter’s enlarged share capital to bumiputera investors is now pending
6.2 Substantial Shareholders’ Shareholdings
The proforma effects of the Proposal on the substantial shareholders’ shareholdings of Mexter, as extracted from the Register of Substantial
Shareholders as at 14 May 2010, are as follows:
Assuming the allotment of the special issue
shares is completed prior to the date of the After (I) and the
As at 14 May 2010 allotment of the Placement Shares Proposal
<--------Direct------> <-------Indirect------> <--------Direct-------> <-------Indirect-----> <--------Direct---------> <-------Indirect------>
No. of No. of No. of No. of No. of No. of
Mexter Mexter Mexter Mexter Mexter Mexter
Substantial Shares Shares Shares Shares Shares Shares
Shareholders held % held held % held held % held held % held held % held held % held
Ivan Sia Teck 28,213,247 31.54 - - 28,213,247 26.76 - - 28,213,247 22.08 - -
Kuan Khian 8,596,200 9.61 - - 8,596,200 8.15 - - 8,596,200 6.73 - -
TSSB - - - - - - - - 22,363,005 17.50 - -
Datuk Ahmad - - - - - - - - - - 22,363,005 17.50
Khairul Azwan - - - - - - - - - - 22,363,005 17.50
# Deemed interested by virtue of his shareholdings in TSSB pursuant to Section 6A of the Companies Act, 1965.
(i) Assuming the placement of the special issue shares will be made to placees which will hold less than 5% each of the enlarged share capital of Mexter
subsequent to the completion of the Proposal.
6.3 NA and Gearing
The proforma effect of the Proposals on the NA and gearing of the Mexter Group based on
the audited consolidated financial statements of Mexter for the FYE 31 December 2009, are
allotment of the
special issue shares
is completed prior to
the date of the After (I)
Audited as at 31 allotment of the and the
December 2009 Placement Shares Proposal
RM’000 RM’000 RM’000
Share capital 8,945 10,543 12,779
Share premium 9,382 9,382 9,382
Other reserves 94 94 94
Accumulated losses (12,459) (12,459) (12,609)
Shareholders’ funds/ NA 5,962 7,560 9,646
No. of Mexter Shares in issue 89,452 105,426 127,789
NA per share (RM) 0.07 0.07 0.08
Total borrowings 2,255 2,255 2,255
Gearing (times) 0.38 0.30 0.23
(i) Assuming the special issue shares are implemented based on an issue price of RM0.10 per
special issue share.
(ii) Assuming the Placement Shares are implemented based on an issue price of RM0.10 per
(iii) After deducting the estimated expenses for the Proposal of RM150,000.
No convertible securities have been issued by Mexter to-date.
The Proposal is expected to be completed by third (3 ) quarter 2010. The Proposal will dilute
the EPS of the Company in view of the enlarged share capital after the Proposal.
Nevertheless, the Group will be able to save on potential finance costs that would have
otherwise been incurred had the Company raised an equivalent amount of funds via bank
For illustration, the finance charges on RM2.086 million of bank borrowings being raised for
working capital would amount to approximately RM0.13 million per annum based on an
indicative annual interest rate of approximately 6%.
The utilisation of proceeds for working capital purpose is not expected to have any material
impact on the consolidated EPS of Mexter in the future.
7. ESTIMATED TIMEFRAME FOR COMPLETION
Barring unforeseen circumstances, the Proposal is expected to be completed by the third (3 )
quarter of 2010.
8. INTENDED CORPORATE EXERCISE ANNOUNCED BUT PENDING COMPLETION
The Board confirms that, as at 14 May 2010, save for the Proposal and the special issue
exercise which is pending implementation as set out in Section 6 above, there are no other
corporate exercises intended which have been announced and are pending completion.
The Proposal is not conditional upon any other corporate proposals.
9. INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED
Datuk Ahmad Shalimin Bin Ahmad Shaffie is the Chairman/Independent Non-Executive
Director of Mexter and is deemed interested in the Proposal. As at 14 May 2010, Datuk
Ahmad Shalimin Bin Ahmad Shaffie and persons connected to him does not have any direct
and indirect shareholding in Mexter.
Accordingly, Datuk Ahmad Shalimin Bin Ahmad Shaffie has abstained and will continue to
abstain from voting and deliberating on the Proposal at all Board meetings of the Company.
He shall also abstain and has undertaken that he shall ensure that all persons connected
with him will abstain from voting in respect of their direct and indirect interests in the
Company on the ordinary resolution pertaining to the Proposal.
Save for Datuk Ahmad Shalimin Bin Ahmad Shaffie, none of the directors and/or major
shareholders of Mexter and/or persons connected to them have any interest, either direct or
indirect, in the Proposal.
10. DIRECTORS’ RECOMMENDATION
The Board (save for Datuk Ahmad Shalimin Bin Ahmad Shaffie), after having considered all
aspects of the Proposal, is of the opinion that the Proposal is in the best interest of the
Company and its shareholders.
Accordingly, the Board (save for Datuk Ahmad Shalimin Bin Ahmad Shaffie) recommends
that you vote in favour of the ordinary resolution pertaining to the Proposal to be tabled at the
Alliance has been appointed as the adviser and placement agent for the Proposal.
12. APPLICATION TO THE AUTHORITIES
Applications to the regulatory authorities namely Bursa Securities is expected to be made
within two (2) months from the date of this announcement.
This announcement is dated 21 May 2010.