Hap Seng to raise capital to drive expansion plans

KUALA LUMPUR: Hap Seng Consolidated Bhd (Hap Seng) plans to undertake initiatives to increase the free float and liquidity of its shares and raise capital to drive its expansion plans.

The proposed initiatives include a private placement of new shares of up to 20% of the current share capital of the company, a two-for-one bonus issue and a one-for-five renounceable rights issue.

"These initiatives mark one of our most significant corporate actions since our listing in 1978 and will provide existing and new shareholders with an opportunity to share in our growth," said managing director Datuk Edward Lee Ming Foo in a press release last Friday, Jan 7.

The right issue to be issued at a discount of about 35% will come with a free detachable warrant for each right share, while the new placement shares will be entitled to participate in the bonus issue and rights issue. The bonus issue shares will be entitled to participate in the rights issue.

Hap Seng has also set its dividend policy to pay out up to 50% of profits after tax going forward.

According to Hap Seng chairman Datuk Jorgen Bornhoft, these proposals are intended to both reward the shareholders for their loyalty and set the stage for the company to achieve its growth ambitions.

Hap Seng expects to raise up to RM1.5 billion from the placements and rights issue. The fund will be deployed on growth initiatives in property investment and development, auto dealerships and building materials. Additional proceeds from the exercise of warrants will be utilised for working capital purposes.

"Malaysia's economy is poised for significant growth over the coming years. With our key businesses in property investment and development, auto dealerships, fertilisers, plantations and building materials, we believe we are well positioned to execute our expansion plans and benefit from that growth," said Lee.

CIMB Investment Bank Bhd has been appointed as the adviser for the proposals and the Joint Global Coordinator together with UBS AG for the placement exercise.

The proposals are subject to shareholder approval and applicable regulatory approvals. Further details will be made available in the company's circular to shareholders, which the company intends to dispatch by end February following customary regulatory reviews and approvals.