MULTIPLE PROPOSALS

As At 22/7/21

LAMBO GROUP BERHAD ("LAMBO" OR THE "COMPANY")

1. PROPOSED SHARE CONSOLIDATION; AND
2. PROPOSED RIGHTS ISSUE WITH WARRANTS (COLLECTIVELY REFERRED TO AS THE "PROPOSALS")

https://www.klsescreener.com/v2/stocks/view/0018/lambo-group-berhad

Total Issued shares = 4,987,880,099

Total Warrant B = 1,051,058,992

Incurred annual losses since 2005 except between 2016 to  2019. 

As at last quarterly date (28/2/21),

Total Cash =RM74.050 million

Total Debt = RM0.10 million

Cash rich from share issuance and sale via ESOS and Private Placement. Yet the directors have decded to undertake Share Consolidation and Rights Issue exercise.

The current total issued shares of 4,987,880,099 is the result of

1. conversion of warrants mostly in 2019

2. frequent and massive share issuance to ESOS and Private Placement in 2020 until March 2021

Click link for Additional Listing Announcement / Subdivison of Shares  due to ESOS, Private Placement and Warrant conversion,

https://www.bursamalaysia.com/market_information/announcements/company_announcement?keyword=&cat=AL%2CALCO&sub_type=&company=0018&mkt=&alph=&sec=&subsec=&dt_ht=&dt_lt=%23%2F#/?category=all

For announcement of past and present Multiple Proposals, clink the below link.

https://www.bursamalaysia.com/market_information/announcements/company_announcement?keyword=multiple+&cat=&sub_type=&company=0018&mkt=&alph=&sec=&subsec=&dt_ht=&dt_lt=%23%2F#/?category=all

On behalf of the Board of Directors of Lambo, Mercury Securities Sdn Bhd wishes to announce that the Company proposes to undertake the following:-

 (i)         proposed consolidation of every 25 existing ordinary shares in Lambo (“Lambo Shares” or “Shares”) into 1 Lambo Share (“Consolidated Share”) (“Proposed Share Consolidation”); and

 (ii)         proposed renounceable rights issue of up to 1,207,787,815 new Shares (“Rights Shares”) together with up to 603,893,907 free detachable warrants in Lambo (“Warrants C”) on the basis of 10 Rights Shares together with 5 free Warrants C for every 2 Consolidated Shares held by the entitled shareholders on an entitlement date to be determined (“Proposed Rights Issue with Warrants”),

 (collectively referred to as the “Proposals”).

 The details of the Proposals are set out in the attachment.

Issue size : Up to 483,115,126 Warrants C.

Tenure of the Warrants C : 3 years commencing on and including the date of issuance of the Warrants C.

Ex-Date : 23 Jul 2021

Entitlement Date : 26 Jul 2021

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3174220

Date Announced: 9 Jul 2021

At end day of 26 Jul 2021, the total issued shares of 4,987,880,099 will be consolidated into 199,515,203 shares and 1,051,058,992 warrant B will be consolidated into 42,042,359 warrants. The consolidate shares and considated warrant B will be listed on 27 Jul 2021. 

Assuming that the rights shares are fully subscribed, upon completion of the rights issue,

Total issued shares = 1,197,091,218

The total number of warrant B will be adjusted accordingly.

Total number of New warrant C = 399,030,406

1.  Share Consolidation will result in 25 shares being consolidated into 1 share at end of day of  26 Jul 2021 (Etitlement date) and listed o 27 Jul 2021. Warrant B will also be consolidated from 25 warrants into 1 warrant.

2.  Shareholders will see their shareholding reduced by 25 times.

3.  If closing price is 1sen on 22 Jul 2021, then the reference price of consolidated share will be 25sen on 23 Jul 2021 (Ex-date)

4.  As an illustration, a shareholder originally holding 50,000 shares will end up with 2000 shares on 23 Jul 2021

5.   Likewise, holder of warrant B will see their holdings reduced by 25 times

6.  The reference price of the consolidated warrant will be 12.5sen on 23 Jul 2021 

7.  The consolidated shares and warrants will be traded for a few market days pending the announcement of the dates related to the rights issue with free warrants exercise

8.  Refer to stocks like SANICHI and PASUKGB (recently undergone similar Mutiple Proposals) to have an idea of the price movement of the consolidated shares, before/after ex-date for the rights issue and after the listing of the rights shares.

9.  Most likely the price of warrant B (12.5sen on 23 Jul 2021) might drop further as the exercise price would have been adjusted upward as a result of the consolidation. Thie trend can be seen in the case of SANICHI-WE.

9. For the rights issue, the entitlement is 5 RIGHTS SHARES TOGETHER WITH 2 FREE WARRANTS C FOR EVERY 1 CONSOLIDATED SHARE 

PRICE CHART OF SANICHI AND PASUKGB THAT HAD SHARES CONSOLIDATION AND RIGHT ISSUE

For both SANICHI and PASUKGB rights issue, the total valid acceptances were under-subscribed, This means that many shareholders are not willing to take out more money to pay for the rights shares plus free warrants, after incurring huge losses due to consolidation exercise or losing confidence in the stock.

However, there were high percentage of Total valid excess applications as shown in the tables. These excess applications were likely from major shareholders, company directors, operator, or friendly parties in view of the under-subscription, and showing support for the exercise.

SANICHI - Details of such valid acceptances and excess applications received are as follows:

PASUKGB - Details of such valid acceptances and excess applications received are as follows:-

23/7/21 

Today 23/7/21 is the 1st day trading of the consolidated shares. The reference price is 25sen for share and 12.5sen for warrant B.

Take the price movement of SANICHI as a guide. The price of LAMBO might follow the same trend.

Take note of the following dates where the price could be volatile at certain stages :

1.  Share consolidation = 23/7/21

2.  Rights Ex-date = 11/8/21 

3.  Trading of Rights (OR) = 13/8/21 - 19/8/21

4.  Rights Application Closing Date = 27/8/21

5.  Listing of Rights Shares And New Warrant C = 13/9/21 

[All dates have been confirmed by announcements released on 28/7/21 (see below)]

( 5 RIGHTS SHARES TOGETHER WITH 2 FREE WARRANTS C FOR EVERY 1 CONSOLIDATED SHARE )

If a person had bought 50,000 shares @ 0.05 some time ago, and goes through the exercise. 

1.  Cost of  50,000 shares = RM2,500

2.  50,000 shares will be consolidated to 2000 shares 

3.  Based on reference price on consolidation date, value of 2,000 consolidated shares @ 0.25 = RM500 

4.  Based on the entitlement ratio,  2,000 consolidated shares will be entitled for 10,000 rights share with 4,000 free warrant C

6.  Cost of subsribing for 10,000 rights shares @0.10 = RM1,000

7.  The person will end up with 12,000 shares and 4,000 warrant C

8.  Average cost per share (excluding free warrants) = (2500 + 1000) / 12000 = RM0.29 

Based on the buy price of the original share (pre-consolidation), work out your average cost and act accordingly

Note :The person apply for rights share can also apply for excess rights share by paying 10sen per excess rights share, The excess rghts application is subject to approval by the company. 

Announcement on 28/7/21 

https://www.klsescreener.com/v2/announcements/view/3400247

Announcement 1  : Rights Issue

https://www.klsescreener.com/v2/announcements/view/3400245

Announcement 2 : Important Relevant Date for Renounceable Rights

The quarterly report was also announced on 28/7/21. As expected, it is another losses for the quarter, mainly due to the item  "Fair value loss on other investment" of  (60,811,969).  

Quarterly rpt on consolidated results for the financial period ended 31/5/2021

https://www.klsescreener.com/v2/announcements/view/3400215

SUMMARY

1.  Share consolidation = 23/7/21

• Ex-consolidation price = 0.25

2.  Rights Ex-date = 11/8/21 

3.  Trading of Rights (OR) = 13/8/21 - 19/8/21

• OR traded at 0.005 seller quote during the entire trading period

4.  Rights Application Closing Date = 27/8/21

Details of such valid acceptances and excess applications received are as follows:-

Successful applicants of the Rights Shares will be given Warrants C on the basis of 2 Warrants C for every 5 Rights Shares successfully subscribed for.

(Probably under-subscribed by retailers. Most excess rights probably taken up by operator, substantial shareholders, directors, etc; Need to confirm with coming announcement on changes in shareholdings )

5.  Listing of Rights Shares And New Warrant C on 13/9/21 

Total shares = 1196968046; WB = 94595020; WC = 398981138

RI price = 0.10, Closing price = 0.07

WC closing price = 0.02

STATUS : SHARES CONSOLIDATION AND RIGHTS ISSUE COMPLETED ON 13/9/21

INVESTMENT IN QUOTED SECURITIES

A. Investment in SINARAN (formerly known as KSTAR) (stock code 5172)

1. The Board of Directors of LAMBO wishes to announce that its wholly-owned subsidiary, Oriented Media Holdings Limited in Hong Kong, had on 15 September 2020 acquired 90,000,000 ordinary shares of K-Star Sports Limited (“KSTAR”), representing 19.78% of the issued and paid up capital of KSTAR, at RM0.135 per share (“KSTAR Shares”) for a total cash consideration of RM12,150,000 (“Consideration”) (“Investment”) from open market.

This announcement is dated 15 September 2020.

2. The Board of Director of LAMBO wishes to announce the following additional information:-
   1. Net loss as per the latest audited report as at 31 December 2019 of KSTAR was RMB 10,919,000
   2. Net asset as per the latest audited report as at 31 December 2019 of KSTAR was RMB 41,147,000

This announcement is dated 22 September 2020.

3. Refer to earlier announcement dated 15 September 2020, the Board of Directors of LAMBO wishes to announce that its wholly-owned subsidiary, Oriented Media Holdings Limited in Hong Kong (“OML”), had acquired additional 34,600,000 ordinary shares of K-Star Sports Limited (“KSTAR”), representing 5.43% of the issued and paid up capital of KSTAR (“KSTAR Shares”) for a total cash consideration of RM7,958,000 (“Consideration”) (“Investment”) from open market. 

This announcement is dated 26 March 2021.

As at 23/7/21, closing price of SINARAN = 0.08

Unrealized loss = 20,108,000 X (0.162 – 0.08) = RM1,648,856

Follow the link to check on NON RELATED PARTY TRANSACTIONS :

https://www.bursamalaysia.com/market_information/announcements/company_announcement?keyword=NON+RELATED+PARTY+TRANSACTIONS&cat=&sub_type=&company=0018&mkt=&alph=&sec=&subsec=&dt_ht=&dt_lt=#/?category=all

B. Investment in FOCUS DYNAMICS GROUP BERHAD (sock code 0116)

The Board of Directors of LAMBO wishes to announce that its wholly-owned subsidiary, Oriented Media Holdings Limited in Hong Kong, had from 6 July 2020 till 10 July 2020 acquired 22,796,600 ordinary shares of Focus Dynamics Group Berhad (“FOCUS”) at averace price of RM1.1253 each (“FOCUS Shares”) for a total cash consideration of RM25,653,013.98 (“Consideration”) (“Investment”) from open market.

This announcement is dated 13 July 2020.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3068113

As at 23/7/21, closing price of

FOCUS = 0.045

FOCUS-PA = 0.01

Based on the purchase price, closing prices and the price movement of FOCUS in 2021, it is likely that the company will end up with massive losses in this investment.

At the moment, it is not easy to compute the actual unrealized losses as the shareholdings has changed due to FOCUS undertaking a Multiple Proposals that was completed in December 2020.

Figure out why the "smart" directors are willing to invest in other penny stocks at high prices. The sellers must be laughing their ways to the bank at the expense of LAMBO's shareholders. 

Think harder and you will likely able to get a clearer picture of  one of the ways how 'smart' directors of loss making penny stocks utilsed and depleted company fund (rightfully belonging to shareholders).

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