KUALA LUMPUR (April 25): Practice Note 17 (PN17) company Khee San Bhd will increase the allotment underwritten in its proposed rights issue after Ng Meng Kee ceased to be a substantial shareholder and requested to discharge his undertaking.

To meet the exercise’s minimum subscription level of RM55 million under its seven-for-one renounceable rights issue coupled with free warrants, the candy and sweet maker has revised the underwriting arrangements from RM27.05 million to RM38.98 million — to cover Ng’s prior undertaking of RM11.94 million.

The company’s largest shareholder Timur Enterprise Sdn Bhd, the vehicle of Ta Win Holdings Bhd's substantial shareholder and executive director Datuk Seri Ngu Tieng Ung, retains its undertaking of the remaining RM16.02 million worth of right shares.

“In view of the foregoing (Ng ceasing to be a substantial shareholder), Ng had vide the letter requested the company to discharge his undertaking pursuant to the undertaking letter dated May 23, 2022, provided by Ng to the company,” Khee San said in a bourse filing on Thursday.

M&A Securities Sdn Bhd is the underwriter for the rights issue with warrants exercise.

Khee San’s rights issue will involve the issuance of renounceable right shares of up to 960.96 million units and up to 549.12 million warrants based on four warrants for every seven right shares subscribed.

With the rights issue priced at 10 sen per share, the exercise is expected to raise between RM55 million on a minimum subscription basis and RM96.1 million under a maximum scenario.

The rights issue forms part of Khee San’s regularisation plan, together with the company’s RM100.97 million capital reduction to its share capital, scheme of arrangement with creditors for amounts owed aggregating to RM138.47 million as at end-March 2022, and establishment of an employee share scheme (SCC) of up to 15% of its share base for eligible directors and employees.

Khee San’s regularisation plan was submitted to Bursa Securities in July last year and is still pending a decision from the bourse regulator, according to the company’s update on April 1 this year.

Ng ceased to be a substantial shareholder in Khee San after he disposed of 2.5 million shares or a 1.82% stake on April 23 this year, paring his stake to 4.77% or 6.55 million shares. Since March 2024, Ng has disposed of an aggregate 7.65% stake or 10.5 million shares.

Previously, Khee San noted that pursuant to the undertaking, the undertaking shareholders had “irrevocably and unconditionally” undertaken that they shall not dispose or otherwise reduce or transfer their existing interest in the company from the undertaking date to the entitlement date.

Shares in Khee San ended unchanged at 17 sen, giving the company a market capitalisation of RM23.34 million.