KUALA LUMPUR (Sept 17): UEM Sunrise Bhd (UEMS) and its major shareholder UEM Group Bhd (UEMG) have mutually agreed to terminate a previous share subscription agreement and replace it with a subscription agreement for the proposed issuance of up to 793 million new UEMS redeemable convertible preference shares (UEMS-RCPS), in light of recent movements in the market price of UEMS shares.

UEMS’ share price, which was trading at RM1.43 at the start of the year on Jan 2, has slid 25.17% to RM1.07 at the close of trading today.

Under the new UEMS-RCPS agreement, UEMG agrees to subscribe for up to 793 million of the five-year UEMS-RCPS at an issue price of RM1 each for an aggregate sum of up to RM793 million, to be satisfied fully in cash.

Each of the RCPS can be converted to 1 UEMS share — at any time after the 54th month from the issuance date at the option of the subscriber — at RM1.60 apiece, subject to adjustments, if any.

Based on the issue price, UEMS is expected to raise gross proceeds of up to RM793 million.

The gross proceeds will be utilised to maintain its stake in subsidiary Bandar Nusajaya Development Sdn Bhd through the redemption of 450 million RCPS of RM1 each issued by Bandar Nusajaya to UEMG in 2005.

In the event the RCPS are not redeemed, the RCPS will be automatically converted into Bandar Nusajaya shares on its maturity, resulting in UEMG having a direct stake in Bandar Nusajaya of approximately 21.8%.

Previously, under the now terminated agreement dated April 3, 2015, UEMG had agreed to subscribe for 524.4 million new shares of 50 sen each in UEMS, at an issue price of RM1.47. That share subscription was expected to raise about RM770.9 million for UEMS.

In its filing today, UEMS has further proposed to amend its memorandum and articles of association to facilitate the issuance of the RCPS, as well as to reclassify the mandatory convertible redeemable preference shares of 1 sen each in the group.

The proposals above are subject to the approval of the non-interested shareholders of UEMS at an extraordinary general meeting to be convened.

Barring any unforeseen circumstances, UEMS expects the proposals to be completed by the fourth quarter of this year.

It should be noted that sovereign wealth fund Khazanah Nasional Bhd holds 100% equity interest in UEMG, which in turn holds 66% equity interest in UEMS as at the date of the proposals.

UEMS’ closing price of RM1.07 today, down 1 sen or 0.93% from yesterday’s close, gives it a market capitalisation of RM4.9 billion.

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