PN17 Company’s FCW Proposes 5-into-1 Capital Reduction
A recent capital re-organization/restructuring by PN17 company –FCW Holdings Bhd which involves firstly a capital reduction with subsequent consolidation and then a further right issue.
Details as follows:
- On Jan 12, FCW announced that  it would cancel 40 sen of the par value of each of its 50 sen shares and consolidate every five resultant shares of 10 sen each into one share of 50 sen each.;
- this capital reduction would result in a  credit of RM111.46 million, which together with its audited share premium account of RM9 million as at June 30, 2006 would be used to reduce its  accumulated losses totalling RM127.52 million as at June 30, 2006;
- furthermore, FCW also proposed a renounceable rights issue of up to 185.77 million shares, with up to 74.31 million free warrants. The rights issue will be on the basis of five shares with two warrants for every existing share at an issue price of 50 sen per rights share after the proposed capital restructuring;
- the rights issue would enable FCW to raise funds to finance the proposed acquisition of two properties for a total of RM86 million cash. (Its subsidiary Federal Telecommunicatuons Sdn Bhd is acquiring freehold land and nine independent blocks of warehouses in Kuala Lumpur from Goh Ban Huat Bhd (GBH) for RM55 million. Another subsidiary FCW Industries Sdn Bhd proposed to buy a parcel of freehold land with four adjoining single-storey factories in Kuala Lumpur from GBH Clay Pipes Sdn Bhd for RM31 million.
However, what’s interesting is that FCW chairman Tan Sri Tan Hua Choon has a 10.79% stake in GBH and has undertake to subscribe for his entitlement and excess applications.
It seems like killing two birds with one stone: GBH get cash diffusion from FCW’s right issue(buying GBH’s properties) and FCW able to  increase its shareholders’ equity to meet the minimum paid-up capital requirement of RM60 million for companies listed on the Main Board which keeps FCW as a listed status entity.
 (The Edge (12/1/07))
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January 18, 2007
Posted in: Corp. Restructuring
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