KUALA LUMPUR (May 18): MMAG Holdings Bhd is planning to consolidate every 10 existing ordinary shares in the ACE Market-listed company into one new share.

As of May 16, MMAG, which is involved in the logistics business, had a total of 2.42 billion issued shares. The counter was last traded at 1.5 sen per share.

Upon the completion of the consolidation, MMAG will see its number of issued shares stand at 242.24 million, the company said in a bourse filing on Thursday (May 18).

The proposed share consolidation is part of the company’s capital management plan to improve its capital structure as well as to facilitate a proposed rights issue.

MMAG has proposed to undertake a renounceable rights issue of up to 1.45 billion new shares, on the basis of six rights shares for every one consolidated share priced at 10 sen each.

The rights issue will be sweetened with up to 726.72 million free detachable warrants in MMAG, on the basis of one warrant for every two rights shares subscribed for, it said.

“The issue price is at a discount of 0.63 sen or approximately 5.93% to the theoretical ex-all price of MMAG share of 10.63 sen each, calculated based on the five-day volume weighted average market price of MMAG share up to and including May 17 (last trading day) after adjusted for the proposed share consolidation of 14.4 sen each.

“The board is of the opinion that the aforementioned discount is deemed sufficiently attractive to entice subscription of the rights shares by the shareholders,” MMAG said.

MMAG said the proposed rights issue is expected to raise total gross proceeds of RM18 million under the minimum scenario and up to RM145.34 million under the maximum scenario.

Under the maximum scenario, the company intends to use the majority of the proceeds (RM70,000) for capital expenditure on warehouses, hubs, depots and related purchases of system, equipment and a new fleet of vehicles.

Under the minimum scenario, MMAG will use the bulk of proceeds (RM6,000) for the purchase of products for the mobile and fulfilment segment.

As at Dec 31, 2022, MMAG has cash and bank balances of RM28.44 million and fixed deposits with licensed banks of RM17.86 million.

MMAG said it intends to preserve the cash and bank balances and use it for the working capital requirements of MMAG’s various business segments to meet any short-term obligations and/or funding requirements in a timely manner.

Meanwhile, it said the warrants, which are attached to the rights shares and to be issued at no cost, are intended to provide an added incentive to the entitled shareholders to subscribe for the rights shares.

Chan Swee Ying, non-independent director of MMAG, is the company’s substantial shareholder, holding an 11.21% stake or 271.62 million shares.

MMAG said it has obtained unconditional and irrevocable written undertaking from Chan that she will not sell, transfer, dispose of or reduce her existing shareholding in MMAG.

Chan will also apply and partially subscribe for her entitlements of 100 million rights shares based on the issue price together with 50 million warrants under the proposed rights issue, for a total subscription proceeds of RM10 million.

MMAG expects the proposals to be completed within six months from the date of approval from Bursa Securities.

TA Securities Holdings Bhd was appointed by MMAG to act as the adviser for the proposals.

Share price of MMAG closed unchanged at 1.5 sen, bringing it a market capitalisation of RM27.25 million. The counter has fallen by 78% in the past year.