KUALA LUMPUR (July 21): Sinmah Capital Bhd, formerly known as Farm's Best Bhd, is planning to raise up to RM44.42 million via a rights issue with free warrants to fund a proposed joint venture (JV) with Encorp Bhd to develop a mixed project in Melaka.

The poultry producer said in a bourse filing the rights issue will be on the basis of five rights shares for every two existing Sinmah shares held (5-for-2), while the warrants will be issued on the basis of one warrant for every four rights shares subscribed (1-for-4), at an entitlement date to be fixed.

The exercise will involve the issuance of up to 222.12 million rights shares, and a maximum of 55.53 million warrants, at an issue price to be determined.

The bulk of the cash call proceeds — the sum above is derived from an indicative issue price of 20 sen apiece — are intended to be used to fund part of the land cost and development expenditure of the proposed JV, said Sinmah.

Recall that Sinmah announced a proposed tie-up with Encorp for the mixed Melaka project — estimated to carry a gross development value of RM865 million on 77.94 acres of leasehold land in Bukit Katil — early last month.

Sinmah will have a 70% stake in the JV company (JVCo), with Encorp owning the remainder stake. The JVCo will then buy the land from Encorp for RM69.65 million.

Sinmah's major shareholder FCH Holdings Sdn Bhd, together with Sinmah MD Datuk Fong Kok Yong and his three siblings collectively control 36.14% in Sinmah.

As their collective interest may rise to 71.62% within six months on completion of the proposed rights issue, they intend to apply for a waiver from having to undertake a mandatory offer for the rest of the stakes they don't own in Sinmah.

However, if they do not succeed in obtaining the relevant approvals for the proposed exemption, the proposed rights issue will not be implemented, said Sinmah.

Further, on completion of the cash call, Sinmah said the board intends to propose a five-year share issuance scheme (SIS) involving up to 15% of the total number of issued Sinmah shares to reward eligible directors and employees.

Sinmah expects the proposals to be completed in the first quarter of 2018.

Shares in Sinmah closed up half a sen or 0.74% at 68 sen yesterday for a market capitalisation of RM41.54 million. — theedgemarkets.com

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