News
Advance Synergy Berhad (ASB Or Company) Proposed Extension Of The Duration And Exercise Period Of ASB's Outstanding Warrants 2000/2003 By Five (5) Years From 28 August 2003 Up To And Including 28 August 2008 And Thereafter The Option To Extend The Exercise Period For A Further Period Of Two (2) Years Expiring On 28 August 2010 (Proposed Warrants Extension)
BackApr 09, 2003
| General Announcement Reference No MI-030409-67022 |
| Submitting Merchant Bank | : | SOUTHERN INVESTMENT BANK BERHAD |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 09/04/2003 |
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| Type | : | Announcement |
| Subject | : | Advance Synergy Berhad (ASB or Company) Proposed extension of the duration and exercise period of ASB's outstanding warrants 2000/2003 by five (5) years from 28 August 2003 up to and including 28 August 2008 and thereafter the option to extend the exercise period for a further period of two (2) years expiring on 28 August 2010 (Proposed Warrants Extension) |
Contents :
1. INTRODUCTION
On behalf of the Board of Directors of ASB, Southern Investment Bank Berhad (SIBB) wishes to announce that the Company proposes to extend the duration and exercise period of ASB's outstanding warrants 2000/2003 (Warrants) by five (5) years from 28 August 2003 up to and including 28 August 2008 and thereafter the option to extend the exercise period for a further period of two (2) years expiring on 28 August 2010.
2. THE PROPOSED WARRANTS EXTENSION
The Company had on 1 May 2000 issued RM183,460,787 equivalent nominal value 5-year 7% convertible loan stocks (CLS) and RM185,874,269 equivalent nominal value 5-year 7% redeemable loan stocks (RLS) together with rights to allotment of 168,896,809 detachable Warrants.
The Warrants were subsequently offered to the stockholders of ASB via a renounceable offer for sale on the basis of one (1) Warrant for every two (2) ordinary stock units of RM1.00 each (Stock Units) held in ASB. The Warrants were listed on the Main Board of the Kuala Lumpur Stock Exchange (KLSE) on 15 September 2000. As at 8 April 2003, no Warrants have been exercised and the total number of outstanding Warrants is 168,896,809.
The expiry date of the Warrants is 28 August 2003. The Deed Poll dated 28 April 2000 executed by ASB governing the Warrants expressly permits the extension of the exercise period of the Warrants subject to relevant regulations and the approval of all relevant authorities as shall be required at the relevant time.
The Company proposes to extend the duration and exercise period of the Warrants by five (5) years from 28 August 2003 up to and including 28 August 2008 (First Extension) and thereafter the option to extend the exercise period for a further period of two (2) years expiring on 28 August 2010 (Further Extension).
Following the First Extension, the Further Extension of up to two (2) years to 28 August 2010 will be implemented by ASB if the weighted average price of ASB Stock Units quoted on the KLSE is at a premium of not more than 20% over the exercise price of RM1.00 per ASB Stock Unit for any period of thirty (30) consecutive days during the six (6)-month period preceding 28 May 2008, being three (3) months prior to the proposed expiry date of 28 August 2008.
The Proposed Warrants Extension is in compliance with the announcement by the Securities Commission (SC) on 30 October 1998 pertaining to extension of the exercise period of warrants and Section 68 (1) of the Companies Act, 1965 (Act) which enables options on shares to have an exercise period of up to ten (10) years.
The Warrants were subsequently offered to the stockholders of ASB via a renounceable offer for sale on the basis of one (1) Warrant for every two (2) ordinary stock units of RM1.00 each (Stock Units) held in ASB. The Warrants were listed on the Main Board of the Kuala Lumpur Stock Exchange (KLSE) on 15 September 2000. As at 8 April 2003, no Warrants have been exercised and the total number of outstanding Warrants is 168,896,809.
The expiry date of the Warrants is 28 August 2003. The Deed Poll dated 28 April 2000 executed by ASB governing the Warrants expressly permits the extension of the exercise period of the Warrants subject to relevant regulations and the approval of all relevant authorities as shall be required at the relevant time.
The Company proposes to extend the duration and exercise period of the Warrants by five (5) years from 28 August 2003 up to and including 28 August 2008 (First Extension) and thereafter the option to extend the exercise period for a further period of two (2) years expiring on 28 August 2010 (Further Extension).
Following the First Extension, the Further Extension of up to two (2) years to 28 August 2010 will be implemented by ASB if the weighted average price of ASB Stock Units quoted on the KLSE is at a premium of not more than 20% over the exercise price of RM1.00 per ASB Stock Unit for any period of thirty (30) consecutive days during the six (6)-month period preceding 28 May 2008, being three (3) months prior to the proposed expiry date of 28 August 2008.
The Proposed Warrants Extension is in compliance with the announcement by the Securities Commission (SC) on 30 October 1998 pertaining to extension of the exercise period of warrants and Section 68 (1) of the Companies Act, 1965 (Act) which enables options on shares to have an exercise period of up to ten (10) years.
3. RATIONALE FOR THE PROPOSED WARRANTS EXTENSION
The market price of ASB Stock Units has been trading below the exercise price of the Warrants of RM1.00 since the listing and quotation of the Warrants on 15 September 2000. The closing market price of ASB Stock Units as at 8 April 2003 is RM0.35 per Stock Unit. Accordingly, the Warrants have been "out of the money" since their listing on 15 September 2000. In addition, the Warrants will expire on 28 August 2003. Coupled with the present weak share market conditions, it will not be favourable for warrantholders to exercise the Warrants unless the market price of ASB Stock Units improves to above the exercise price of the Warrants of RM1.00.
The Proposed Warrants Extension is intended to allow the warrantholders who have not been able to exercise their Warrants additional flexibility in exercising their Warrants as and when the market price of ASB Stock Units are more favourable. Upon the exercise of the Warrants, ASB will be able to utilise the proceeds from the exercise of the Warrants to, inter alia, redeem/repurchase the RLS/CLS and/or repay borrowings.
Unless the ASB Stock Units are traded above RM1.00 in the immediate future, it is unlikely that the warrantholders will exercise their Warrants prior to the expiry date of the Warrants on 28 August 2003. Upon the expiry date, the Warrants will have zero value. The Proposed Warrants Extension would allow a longer period for the exercise of the Warrants.
The Proposed Warrants Extension would also benefit the Company as the Warrants, if exercised, will provide the Company with additional funds and further strengthen its capital base. Upon exercise of the Warrants, stockholders would benefit from the enhancement in the value of the Company. In addition, it should be noted that the Proposed Warrants Extension will not cause any further dilution in the stockholders' interests other than that which had already been taken into account when the Warrants were originally issued.
The Proposed Warrants Extension is intended to allow the warrantholders who have not been able to exercise their Warrants additional flexibility in exercising their Warrants as and when the market price of ASB Stock Units are more favourable. Upon the exercise of the Warrants, ASB will be able to utilise the proceeds from the exercise of the Warrants to, inter alia, redeem/repurchase the RLS/CLS and/or repay borrowings.
Unless the ASB Stock Units are traded above RM1.00 in the immediate future, it is unlikely that the warrantholders will exercise their Warrants prior to the expiry date of the Warrants on 28 August 2003. Upon the expiry date, the Warrants will have zero value. The Proposed Warrants Extension would allow a longer period for the exercise of the Warrants.
The Proposed Warrants Extension would also benefit the Company as the Warrants, if exercised, will provide the Company with additional funds and further strengthen its capital base. Upon exercise of the Warrants, stockholders would benefit from the enhancement in the value of the Company. In addition, it should be noted that the Proposed Warrants Extension will not cause any further dilution in the stockholders' interests other than that which had already been taken into account when the Warrants were originally issued.
4. FINANCIAL EFFECTS OF THE PROPOSED WARRANTS EXTENSION
4.1 Share Capital
The Proposed Warrants Extension is not expected to have any immediate effect on the issued and paid-up share capital of the Company. The issued and paid-up share capital will increase depending on the number of Warrants exercised subsequent to the Proposed Warrants Extension. The effects on the share capital are set out in Table 1.
4.2 Earnings
The Proposed Warrants Extension is expected to contribute positively to the future earnings of the ASB Group upon the exercise of the Warrants in the future. Upon exercise of the Warrants, the proceeds are expected to be utilised to, inter alia, redeem/repurchase the RLS/CLS and/or repay borrowings. As a result, the earnings of the ASB Group will be enhanced by the corresponding savings in interest expense.
4.3 Net Tangible Assets (NTA)
The Proposed Warrants Extension will not have any material effect on the NTA of the ASB Group for the financial year ending 31 December 2003. However, assuming the full exercise of the Warrants, the proforma NTA of the ASB Group is expected to increase from RM332.367 million (or RM0.98 per Stock Unit) to approximately RM506.690 million (or RM0.99 per Stock Unit) based on the audited consolidated accounts of ASB Group as at 31 December 2001. The effects on the NTA are set out in Table 2.
4.4 Major Stockholders
The Proposed Warrants Extension does not have any effect on the stockholdings of the major stockholders of ASB. The Proposed Warrants Extension also does not cause any further dilution in the stockholders' interests other than that which would have already been taken into account when the Warrants were originally issued.
4.5 Dividends
The Directors of ASB do not recommend the payment of any dividends for the financial year ended 31 December 2002. Barring unforeseen circumstances, any dividends to be declared by ASB for the financial year ending 31 December 2003 would depend on, amongst others, the profitability and cashflow position of the ASB Group. The Proposed Warrants Extension is not expected to have any material effect on the dividend policy of the Company.
5. CONDITIONS OF THE PROPOSED WARRANTS EXTENSION
The Proposed Warrants Extension is conditional upon approvals being obtained from the following:
(i) SC;
(ii) Stockholders of ASB in an extraordinary general meeting to be convened, whereby at least 75% of the stockholders present in person or by proxy vote in favour of the Proposed Warrants Extension;
(iii) Warrantholders of ASB in a warrantholders meeting to be convened for the Proposed Warrants Extension, whereby at least 75% of the warrantholders present in person or by proxy vote in favour of the Proposed Warrants Extension; and
(iv) any other relevant regulatory authorities.
In the event that any of the above approvals is not obtained, the Warrants will expire as originally scheduled on 28 August 2003. The Further Extension is not subject to further approvals of the stockholders of ASB, warrantholders of ASB and regulatory authorities. The Further Extension is conditional upon the First Extension.
(i) SC;
(ii) Stockholders of ASB in an extraordinary general meeting to be convened, whereby at least 75% of the stockholders present in person or by proxy vote in favour of the Proposed Warrants Extension;
(iii) Warrantholders of ASB in a warrantholders meeting to be convened for the Proposed Warrants Extension, whereby at least 75% of the warrantholders present in person or by proxy vote in favour of the Proposed Warrants Extension; and
(iv) any other relevant regulatory authorities.
In the event that any of the above approvals is not obtained, the Warrants will expire as originally scheduled on 28 August 2003. The Further Extension is not subject to further approvals of the stockholders of ASB, warrantholders of ASB and regulatory authorities. The Further Extension is conditional upon the First Extension.
6. DIRECTORS' AND MAJOR STOCKHOLDERS' INTERESTS
The interests of the Directors in ASB Stock Units and Warrants are as set out in Table 3 and Table 4 respectively. Hence, Dato' Ahmad Sebi Bakar and Datin Masri Khaw Binti Abdullah are deemed interested in the Proposed Warrants Extension. Accordingly, the interested Directors have abstained and will continue to abstain from all deliberations and voting at the Board of Directors' meetings in respect of the Proposed Warrants Extension. The interested Directors will also abstain from voting at the extraordinary general meeting in respect of the Proposed Warrants Extension. However, the interested Directors will be voting at the warrantholders' meeting in respect of the Proposed Warrants Extension.
Save as disclosed above, none of the other Directors and/or major stockholders of ASB as well as persons connected to them, have any interest, direct or indirect, in the Proposed Warrants Extension.
Save as disclosed above, none of the other Directors and/or major stockholders of ASB as well as persons connected to them, have any interest, direct or indirect, in the Proposed Warrants Extension.
7. STATEMENT BY BOARD OF DIRECTORS
Having considered the rationale for the Proposed Warrants Extension, your Directors are of the opinion that the Proposed Warrants Extension is in the long term interest of the ASB Group.
8. DEPARTURE FROM THE SECURITIES COMMISSION'S POLICIES AND GUIDELINES ON ISSUE/OFFER OF SECURITIES (SC GUIDELINES)
The Proposed Warrants Extension is in compliance with the SC Guidelines.
9. ADVISER
SIBB has been appointed as the adviser to ASB for the Proposed Warrants Extension.
10. APPLICATION TO THE SC
An application to the SC for the Proposed Warrants Extension will be made within fourteen (14) days from the date of this announcement.
This announcement is dated 9 April 2003.
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