KUALA LUMPUR (July 20): Industronics Bhd, a mature electronics company, plans to pay off RM26.84 million it owed to four creditors by issuing 536.8 million new shares at five sen per share.

As at end-May 2023, the group had total trade and other payables of RM44.05 million, which will be reduced to RM17.21 million after the proposed debt settlement, on a pro forma basis.

In a bourse filing on Thursday (July 20), Industronics said it has entered into debt settlement agreements with the four creditors, which entails a settlement of debts totalling RM26.84 million owed to LTL (RM9.54 million), Zhou Qilin (RM6.13 million), Lissington Ltd (RM7.79 million) and Fuka Meito (Hong Kong) Ltd (RM3.38 million).

Following the proposed debt settlement, LTL's shareholding in Industronics will increase to 26.71% from 20.02% currently, Zhou to 9.85%, Lissington to 12.53% and Fuka Meito to 5.43%, given a minimum scenario where none of the existing warrants are exercised prior to the proposed debt settlement.

But assuming all of the existing warrants are exercised, LTL's shareholding in Industronics will increase to 28.81%, Zhou to 8.47%, Lissington to 10.77% and Fuka Meito to 4.67%.

Industronics said the issue price of five sen for each settlement share is at a premium of 10.38% to the five-day volume weighted average market price of the shares up to July 18 of 4.53 sen, said Industronics.

The repayment to its creditors via issuance of settlement shares is expected to reduce the group’s debt, while preserving its cash and bank balances, which stood at RM2.12 million as at May 31. "(These cash and bank balances) can be utilised for other purposes such as working capital and existing businesses," it added.

The proposed debt settlement is subject to approvals of the shareholders of the company at an extraordinary general meeting to be convened.

TA Securities Holdings Bhd has been appointed as the adviser, while Asia Equity Research Sdn Bhd the independent adviser to advise the non-interested directors and shareholders of the group, for the proposed debt settlement.

Industronics expects the proposed debt settlement to be completed in the second half of 2023.

Industronics' share price closed unchanged at five sen on Thursday, valuing the group at RM35.38 million.