MALTON BERHAD (MALTON OR COMPANY)

PROPOSED PRIVATE PLACEMENT OF UP TO 40,000,000 NEW ORDINARY SHARES OF

RM1.00 EACH IN MALTON (PROPOSED PRIVATE PLACEMENT)

1.

INTRODUCTION
On behalf of the Board of Directors of Malton (Board), KAF Investment Bank Berhad (KAF)
wishes to announce that the Company proposes to undertake the Proposed Private Placement.

2.

PROPOSED PRIVATE PLACEMENT

2.1

Details of the Proposed Private Placement

The Proposed Private Placement would involve the issuance of up to 40,000,000 new
ordinary shares of RM1.00 each in Malton (Malton Shares or Shares) (Placement
Shares), representing approximately 9.3% of the issued and paid-up share capital of the
Company, to be issued at an issue price to be determined and announced later.

2.2

Placement arrangement
The Placement Shares are intended to be placed out to third party investor(s) to be
identified at a later date and who qualify under Schedules 6 and 7 of the Capital Markets
& Services Act 2007.
In addition, the Placement Shares are not intended to be placed out to any director,
major shareholder or chief executive of Malton or any interested person connected with
such director, major shareholder or chief executive.
The Proposed Private Placement may be implemented in one or more tranches within a
period of six (6) months from the date of the approval from Bursa Malaysia Securities
Berhad (Bursa Securities) for the Proposed Private Placement or any extended period
as may be approved by Bursa Securities, subject to the then prevailing market
conditions.

2.3

Basis of determining the issue price of the Placement Shares

The issue price of the Placement Shares will be determined and fixed by the Board at a
later date after receipt of all relevant approvals for the Proposed Private Placement. The
final issue price for each tranche of the Placement Shares shall be determined
separately in accordance with market-based principles.
The Placement Shares may be issued at a discount of not more than 10% to the five (5)day weighted average market price of Malton Shares immediately preceding the pricefixing date. In any event, the issue price of the Placement Shares shall not be lower than
the par value of Malton Shares of RM1.00 each.

2.4

Ranking of the Placement Shares

The Placement Shares shall, upon allotment and issue, rank pari passu in all respects
with the existing Malton Shares, except that they shall not be entitled to any dividends,
rights, allotments and/or any other forms of distribution, the entitlement date of which is,
prior to the date of allotment of the Placement Shares.
The Placement Shares are not expected to be entitled to the first and final single-tier
dividend of 3% for every one Share, the entitlement date of which has been fixed on 31
December 2014.

2.5

Listing of and quotation for the Placement Shares

An application will be made to Bursa Securities for the listing of and quotation for the
Placement Shares on the Main Market of Bursa Securities.

2.6

Utilisation of proceeds
The quantum of proceeds to be received by the Company pursuant to the Proposed
Private Placement would depend on the actual number of Placement Shares issued and
the final issue price. For illustration purpose only, assuming that the entire 40,000,000
Placement Shares are fully issued at an indicative issue price of RM1.00 each, the
Company would raise gross proceeds amounting to RM40,000,000 from the Proposed
Private Placement. The gross proceeds are proposed to be utilised as follows:

Gross
Proceeds
RM000

Proposed utilisation of proceeds

Repayment of bank borrowings

(1)

Expected
utilisation time
frame from date of
completion of the
Proposed Private
Placement

20,000

Within
12 months

Working capital for Malton and its subsidiaries

(2)
(Malton Group or the Group)

19,800

Within
12 months

Estimated expenses relating to the Proposed

200

(3)

Private Placement
Total

Within 1
month

40,000

Notes:
(1)

As at 30 September 2014, the Groups bank borrowings was approximately RM256.18

million as per the unaudited interim financial report for the financial period ended 30
September 2014. The estimated annual interest savings arising from the part repayment of
the Groups borrowings based on an average interest rate of 8% per annum would be
approximately RM1.60 million. Any proceeds not utilised by the Company to repay bank
borrowings shall be utilised as working capital of the Group.

(2)

Approximately RM19.80 million is proposed to be utilised to finance the Groups working

capital requirements for existing and up-coming property development projects and
construction jobs over the next 12 months. Such working capital may include project
development related costs, including payment to contractors/sub-contractors/suppliers, staff
related costs, promotional and marketing expenses, general overheads and other
administrative expenses.

(3)

The estimated expenses consist of professional fees, fees payable to authorities and other
miscellaneous expenses to be incurred in relation to the Proposed Private Placement. Any
variation in the actual amount of expenses will be adjusted to/from the amount allocated for
working capital purposes.

Any difference between the illustrated proceeds above and the actual proceeds raised
from the Proposed Private Placement (which is dependent on the issue price and the
final number of Placement Shares issued) as well as any differences in the actual
expenses relating to the Proposed Private Placement shall be adjusted to the allocation
for working capital of the Malton Group.

3.

RATIONALE FOR THE PROPOSED PRIVATE PLACEMENT

The purpose of the Proposed Private Placement is to enable the Company to raise additional
funds in an expeditious manner to reduce its bank borrowings.
The Board also intends to utilise the placement proceeds to partly finance the working capital
requirements of the Group for the existing and up-coming new property development projects
and construction jobs of the Group over the next 12 months.
The Proposed Private Placement enables the Company to raise equity capital without having
any interest cost burden which would otherwise arise if the Group takes up more bank
borrowings. In this respect, the Board expects the Proposed Private Placement to contribute
positively to the future earnings and continuing growth of the Malton Group.
After due consideration of the various methods of fund raising, the Board is of the opinion that
the Proposed Private Placement is an appropriate avenue of fund raising at this juncture as it
enables the Company to raise funds expeditiously. Upon completion of the Proposed Private
Placement, the enlarged capital base and shareholders funds are also expected to further
strengthen the financial position of the Group. In addition, the Proposed Private Placement may
potentially increase the liquidity of the Malton Shares in the market.

4.

EFFECTS OF THE PROPOSED PRIVATE PLACEMENT

The proforma effects of the Proposed Private Placement are set out below in the ensuing
sections:
4.1

Issued and paid-up share capital

The proforma effects of the Proposed Private Placement on the issued and paid-up
share capital of the Company are as set out below.

Issued and paid-up share capital as at

the date of this announcement
Add: Placement Shares to be issued
pursuant to the Proposed
Private Placement
Enlarged issued and paid-up share
capital

No. of Malton Shares

RM

428,415,812

428,415,812

40,000,000

40,000,000

468,415,812

468,415,812

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4.2

Net assets (NA) per share and gearing

The proforma effects of the Proposed Private Placement on the NA per share and
gearing of the Group, based on the audited consolidated financial statements of the
Company as at 30 June 2014, are as set out below.

Share capital

Audited as at
30 June 2014

After the Proposed

Private Placement

RM000

RM000

422,550

462,550
(1)(2)

Reserves

236,776

Shareholders funds / NA

659,326

699,126

No. of Malton shares (000)

422,550

462,550

NA per Malton share (RM)

236,576

1.56

Interest bearing borrowings (RM000)

390,170

Gearing (times)

0.59

1.51
(3)

370,170
0.53

Notes:

4.3

(1)

After deducting the estimated expenses in relation to the Proposed Private Placement from
the share premium and retained earnings accounts amounting to about RM200,000.

(2)

Assuming the issue price for the Placement Shares is RM1.00 each.

(3)

Based on the utilisation of approximately RM20 million of the total gross proceeds to repay
part of the Groups bank borrowings as disclosed in Section 2.6 of this announcement.

Earnings and earnings per share (EPS)

The Proposed Private Placement is not expected to have any material effects on the
consolidated earnings of the Group for the financial year ending 30 June 2015 except for
the corresponding dilution in the consolidated EPS of Malton as a result of the increase
in the number of Malton Shares pursuant to the Proposed Private Placement.
Nevertheless, the Group would be in the position to repay part of its bank borrowings,
which would therefore result in some interest savings to the Group. Based on an average
interest cost of 8% per annum, the placement proceeds of approximately RM20 million
which are allocated to repay a part of the bank borrowings are expected to result in an
annual interest savings of about RM1.60 million.

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4.4

Substantial shareholders shareholdings

The proforma effects of the Proposed Private Placement on the substantial shareholders
shareholdings of Malton based on the Register of Substantial Shareholders are as set
out below.

Substantial
shareholders

As at the date of this announcement

Direct

After the Proposed Private Placement

Indirect

Direct

Indirect

No. of
Shares

No. of
Shares

No. of
Shares

No. of
Shares

Malton
Corporation
Sdn Bhd

158,477,313

36.99

158,477,313

33.83

Tan Sri Lim

Siew Choon

(1)

158,477,313

36.99

(1)

158,477,313

33.83

Puan Sri Tan

Kewi Yong

(1)

158,477,313

36.99

(1)

158,477,313

33.83

Note:
(1)

4.5

Deemed interested by virtue of his/her substantial shareholdings in Malton Corporation Sdn

Bhd.

Convertible securities
The Proposed Private Placement is not expected to have any effects on the Companys
existing warrants 2011/2018 (Warrants), 7-year 6% redeemable convertible secured
loan stocks (RCSLS) and the options granted under the employees share option
scheme (ESOS). Save for the Warrants, RCSLS and ESOS options, the Company
does not have any other existing convertible securities as at the date of this
announcement.

5.

APPROVALS REQUIRED
The Proposed Private Placement is subject to and conditional upon approvals being obtained
from the following:
(i)

Bursa Securities, for the listing of and quotation for the Placement Shares to be issued
pursuant to the Proposed Private Placement on the Main Market of Bursa Securities.

(ii)

any other relevant authorities, if required.

The Company had earlier obtained a general mandate from its shareholders at the last Annual
General Meeting which was convened on 20 November 2014 pursuant to Section 132D of the
Companies Act, 1965 that empowers the Board to issue new ordinary shares in Malton from
time to time upon such terms and conditions and for such purposes as the Board may deem fit
provided that the aggregate number of new Malton Shares to be issued does not exceed ten
percent (10%) of the issued and paid-up share capital of the Company. The said mandate is
valid until the next annual general meeting to be convened.
The Proposed Private Placement is not conditional upon any other proposals undertaken or to
be undertaken by the Company.

6.

INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED

WITH THEM
None of the Directors and/or major shareholders of the Company and/or persons connected to
them as defined in the Main Market Listing Requirements has any interest, whether direct or
indirect, in the Proposed Private Placement.

7.

DIRECTORS RECOMMENDATION
The Board, after having considered all aspects of the Proposed Private Placement, is of the
opinion that the Proposed Private Placement is in the best interest of the Group.

8.

ADVISER AND PLACEMENT AGENT

The Board has appointed KAF as the Adviser and Placement Agent for the Proposed Private
Placement.

9.

ESTIMATED TIMEFRAME FOR SUBMISSION TO THE AUTHORITIES

Barring unforeseen circumstances, all the relevant applications to the authorities in relation to
the Proposed Private Placement will be made within one (1) month from the date of this
announcement.

10.

ESTIMATED TIMEFRAME FOR COMPLETION

Barring unforeseen circumstances, the Proposed Private Placement is expected to be
st
completed by the end of first (1 ) quarter of 2015.

This announcement is dated 28 November 2014.