Proposed Renounceable Rights Issue Of Warrants Dec 22, 2009 by broverya81

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									Proposed Renounceable Rights Issue Of Warrants

Dec 22, 2009

General Announcement

 Submitting Merchant Bank          AMINVESTMENT BANK BERHAD
 Company Name                :     GAMUDA BERHAD
 Stock Name                  :     GAMUDA
 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.


                       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



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      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


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             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


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     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


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              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


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        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.




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TABLE 1          INDICATIVE SALIENT TERMS OF THE WARRANTS

Number of Warrants         :   Up to 267,696,915 Warrants.

Form and                   :   The Warrants shall be issued in registered form.
Denomination

Board Lot                  :   For purpose of trading on Bursa Securities, a board lot of
                               Warrants shall be 100 units of Warrants, unless otherwise revised
                               by the relevant authorities.

Exercise Rights            :   Each Warrant entitles the registered holder to subscribe for one
                               (1) new Share at any time during the Exercise Period at the
                               Exercise Price, subject to adjustments in accordance with
                               provisions of the Deed Poll governing the Warrants.

Tenure of Warrants         :   Five (5) years from the date of issuance of the Warrants.

Exercise Period            :   The Warrants may be exercised at any time within a period of five
                               (5) years commencing on and including the date of issue of the
                               Warrants to the close of business at 5.00 p.m. on the business
                               day immediately preceding the date which is the fifth (5)
                               anniversary from the date of issue.

                               Any Warrants not exercised during the Exercise Period will
                               thereafter lapse and cease to be valid for any purpose.

Expiry Date                :   A date being five (5) years from and including the date of issue of
                               the Warrants.

Exercise Price             :   The exercise price of the Warrants shall be determined by the
                               Board at a later date after receipt of all relevant approvals, after
                               taking into consideration the five (5) day WAMP of Gamuda
                               Shares immediately preceding the price-fixing date to be
                               determined by the Board.

                               The Exercise Price may be subject to adjustments under certain
                               circumstances in accordance with the provisions of the Deed Poll
                               governing the Warrants.

Mode of Exercise           :   The registered holder of the Warrants shall pay cash for the
                               Exercise Price when subscribing for new Shares.

Voting Rights of           :   The holders of the Warrants are not entitled to any voting rights or
Warrants                       to participate in any distribution and/or offer of further securities in
                               the Company until and unless such holder of the Warrants are
                               issued with new Shares arising from their exercise of the
                               Warrants.

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




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Adjustments to the         :   The Exercise Price of the Warrants and the number of Warrants in
Exercise Price and             issue may be subject to adjustments under certain circumstances
number of Warrants             in accordance with provisions of the Deed Poll governing the
                               Warrants.

Rights of the holders of   :   Where a resolution has been passed for a members’ voluntary
the Warrants in the            winding-up of the Company or there is a compromise or
event of winding-up,           arrangement, whether or not for the purpose of or in connection
compromise and/or              with a scheme for the reconstruction of the Company or the
arrangement                    amalgamation of the Company with one or more companies :-

                               (a)   for the purpose of such winding-up, compromise or
                                     arrangement (other than consolidation, amalgamation or
                                     merger in which the Company is the continuing corporation)
                                     to which the holders of the Warrants or some persons
                                     designated by them for such purposes by special resolution,
                                     shall be a party, the terms of such winding-up, compromise
                                     or arrangement shall be binding on all the holders of the
                                     Warrants; and

                               (b)   in any other case, every holder of the Warrants shall be
                                     entitled at any time within six (6) weeks after the passing of
                                     such resolution or the granting of the court order, by
                                     irrevocable surrender of his Warrants to the Company
                                     together with payment of the relevant subscription monies to
                                     elect to be treated as if he had immediately prior to the
                                     commencement of such winding-up, compromise or
                                     arrangement exercised the subscription rights represented
                                     by such Warrants and be entitled to receive out of the
                                     assets of the Company which would be available in
                                     liquidation if he had on such date been the holder of the
                                     new Shares to which he would have become entitled
                                     pursuant to such exercise and the liquidator of the Company
                                     shall give effect to such election accordingly.

                               Subject to the foregoing, if the Company is wound up or an order
                               has been granted for such compromise or arrangement, all
                               subscription rights which have not been exercised within six (6)
                               weeks of the passing of such resolution or the court order shall
                               lapse and the Warrants will cease to be valid for any purpose.

Transferability            :   The Warrants shall be transferable in the manner provided under
                               the Securities Industry (Central Depositories) Act, 1991 and the
                               Rules of Bursa Depository.

Deed Poll                  :   The Warrants will be constituted under a Deed Poll to be executed
                               by the Company.

Governing Law              :   The Warrants and the Deed Poll shall be governed by the laws of
                               Malaysia.

Listing                    :   Application will be made for the admission of the Warrants to the
                               Official List of Bursa Securities, the listing and quotation of the
                               Warrants on the Main Market of Bursa Securities as well as the
                               listing and quotation of the new Shares to be issued pursuant to
                               the exercise of the Warrants on the Main Market of Bursa
                               Securities.




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For illustrative purposes, the tables below set out the proforma effects of the Proposed Rights Issue Of Warrants based on the following scenarios:

Minimum Scenario:          Assuming none of the Outstanding Granted ESOS Options and Outstanding Non-granted ESOS Options are exercised
                           prior to the Entitlement Date.

Maximum Scenario:          Assuming the Outstanding Granted ESOS Options and Outstanding Non-granted ESOS Options are exercised in full prior
                           to the Entitlement Date.


TABLE 2           SHARE CAPITAL

The effects of the Proposed Rights Issue Of Warrants on the issued and paid-up share capital of the Company are as detailed below:-

                                                                                Minimum Scenario                      Maximum Scenario
                                                                           No. of Shares         RM’000          No. of Shares         RM’000

issued and paid-up share capital

As at 17 December 2009                                                     2,016,762,108          2,016,762       2,016,762,108          2,016,762

Add: Assuming full exercise of all Outstanding Granted ESOS Options                    -                  -         67,728,000             67,728

Add: Assuming full exercise of all Outstanding Non-granted ESOS Options                -                  -         57,085,210             57,085


                                                                           2,016,762,108          2,016,762       2,141,575,318          2,141,575

To be issued upon full exercise of Warrants into new Shares                  252,095,264            252,095        267,696,915            267,697

Enlarged issued and paid-up share capital                                  2,268,857,372          2,268,857      2,409,272,233          2,409,272




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TABLE 3            NA AND GEARING

Minimum Scenario

                                                                                (I)                   (II)                  (III)
                                                                             After
                                                                 adjustments for          After (I) and         After (II) and
                                                                exercise of ESOS      Proposed Rights          assuming full
                                            Audited as at 31     options up to 17             Issue Of           exercise of
                                                                                                      (1)                    (2)
                                                  July 2009       December 2009            Warrants              Warrants
                                                    RM’000                RM’000               RM’000                RM’000

 Share capital                                     2,009,257             2,016,762            2,016,762             2,268,857
 Reserves                                          1,151,754             1,159,595            1,159,595             1,605,804
 Warrants reserves                                         -                     -               25,210                     -
 Shareholders’ equity / NA                         3,161,011             3,176,357            3,201,567             3,874,661

 No. of Shares in issue ('000)                     2,009,257             2,016,762            2,016,762             2,268,857
 NA per share (RM)                                      1.57                  1.57                 1.59                  1.71
 Total Borrowings                                  1,538,665             1,538,665            1,538,665             1,538,665
 Gearing (times)                                        0.49                  0.48                 0.48                  0.40




Notes:-

(1)       Subject to expenses to be incurred relating to the Proposed Rights Issue Of Warrants which has yet to be determined at this juncture.
(2)       Based on the indicative exercise price of RM2.67 per Warrant.




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Maximum Scenario

                                                                             (I)                  (II)                   (III)                (iv)
                                                                          After        After (I) and
                                                              adjustments for        assuming full           After (II) and      After (III) and
                                                             exercise of ESOS        exercise of all     Proposed Rights         assuming full
                                          Audited as at 31    options up to 17         outstanding               Issue Of          exercise of
                                                                                                   (1)                    (2)                  (3)
                                                July 2009      December 2009       ESOS options               Warrants             Warrants
                                                  RM’000               RM’000              RM’000                 RM’000               RM’000

 Share capital                                  2,009,257            2,016,762            2,141,575              2,141,575            2,409,272
 Reserves                                       1,151,754            1,159,595            1,388,274              1,388,274            1,862,098
 Warrants reserves                                      -                    -                    -                 26,770                    -
 Shareholders’ equity / NA                      3,161,011            3,176,357            3,529,850              3,556,619            4,271,370

 No. of Shares in issue ('000)                  2,009,257            2,016,762            2,141,575              2,141,575            2,409,272
 NA per share (RM)                                   1.57                 1.57                 1.65                   1.66                 1.77
 Total Borrowings                               1,538,665            1,538,665            1,538,665              1,538,665            1,538,665
 Gearing (times)                                     0.49                 0.48                 0.44                   0.43                 0.36




Notes:-

(1)       Assuming the full exercise of Outstanding Granted ESOS Options and Outstanding Non-granted ESOS Options amounting to an aggregate of 57,085,210
          options at an exercise price of RM2.67.
(2)       Subject to expenses to be incurred relating to the Proposed Rights Issue Of Warrants which has yet to be determined at this juncture.
(3)       Based on the indicative exercise price of RM2.67 per Warrant.




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