KUALA LUMPUR (Oct 9): Luster Industries Bhd has proposed to undertake a RM50 million capital reduction via cancellation of its paid-up share capital to eliminate its accumulated losses.

The proposed capital reduction will result in its share capital being reduced to RM262.28 million, resulting in a capital reduction of RM50 million, which will be utilised to set off its accumulated losses of RM34.68 million at the group level.

In a Bursa Malaysia filing on Monday, the plastic parts and components manufacturer said the proposal is aimed to more accurately reflect the value of the underlying assets and the company’s financial position.

It will also enhance Luster’s financial profile with bankers, customers, suppliers, investors and other stakeholders, the group stated. As a result of the capital reduction, Luster’s accumulated losses will turn into retained earnings of RM15.22 million.

As at Sept 29, 2023 (the latest practicable date prior to this capital reduction announcement), the issued share capital of the group was RM312.28 million, comprising 3.02 billion shares. The proposed capital reduction is expected to complete by the first quarter of next year (1Q2024).

UOB Kay Hian has been appointed as the principal adviser to the proposed capital reduction exercise.

Shares in Luster Industries closed unchanged at 7.5 sen, giving it a market capitalisation of RM226.70 million.