KUALA LUMPUR (June 24): VS Industry Bhd (KL:VS), whose share price has climbed 62% year to date, has proposed a bonus issue of up 395.7 million warrants on the basis of one warrant for every 10 existing shares.

The warrants, with a tenure of two years, will be issued at no cost to the entitled shareholders. The exercise price of the warrants will be determined at a later date.

Assuming the indicative exercise price of the warrants at RM1.35 — which represents a premium of 21.63 sen or 19.08% to the five-day volume weighted average of VS Industry’s shares up to and including the latest practicable date of RM1.1337 — the company is expected to raise between RM518 million under the minimum scenario and RM534.2 million under the maximum scenario.

According to a statement, the electronics manufacturing services provider intends to utilise 50% of the gross proceeds to partially repay interest-bearing borrowings, with 30% going towards working capital requirements and 20% for potential investments and expansion of facilities.

The proposed exercise is expected to be completed by the third quarter of this year.

VS Industry managing director Datuk SY GAN said the proposed exercise provides shareholders an option to further increase their equity participation in the group by exercising the warrants at a pre-determined price over the tenure of the warrants.

This exercise would potentially provide additional funds to the group for working capital needs as and when the warrants are exercised without incurring additional interest expense as compared to bank borrowings, he said.

“Separately, we are excited by our foray into the Philippines following the incorporation of a wholly-owned subsidiary in the country. VS sees ample opportunities that we can capitalize on by leverage on our proven track record and strong technical expertise.

“Overall, the outlook for the group is bright, fuelled by healthy pickup in sales orders and introduction of new product models by our key customers. Meanwhile, our team remains in active discussion with prospective customers and we look forward to expanding our clientele by the end-2024,” Gan added.

Shares of VS Industry closed up two sen or 1.54% to RM1.32 on Monday, giving it a market capitalisation of RM5.15 billion.