KUALA LUMPUR (October 22): Loss-making Green Ocean Corp Bhd (KL:GOCEAN) has proposed to undertake a RM92.5 million share capital reduction to wipe out the food and beverage (F&B) distributor’s accumulated losses.

The ACE Market-listed company has been in the red for four consecutive years, racking up losses totalling RM60.8 million by end-September 2023.

The RM92.5 million to be credited from the share capital reduction will be used to set off the accumulated losses and give rise to retained earnings of RM31.41 million based on audited financial statements for the 15-month financial period ended Sept 30, 2023, according to the company’s bourse filing on Tuesday.

Green Ocean had in August 2023 changed its financial year end from June 30 to Sept 30.

The company currently has a share base of 211.16 million issued shares with an issued share capital of RM143.49 million. The counter ended at 18.5 sen on Tuesday, giving the company a market capitalisation of RM39.06 million.

Green Ocean has 62.14 million outstanding warrants exercisable at an exercise price of RM1.

Assuming none of the warrants are exercised into new shares prior to the capital reduction’s completion, the company’s share capital is to be reduced to RM50.99 million under the proposed exercise.

The share capital reduction exercise is subject to shareholders’ approval. Green Ocean’s sole substantial shareholder is Focus Dynamics Centre Sdn Bhd, a wholly-owned unit of Focus Dynamics Group Bhd (KL:FOCUS), with a 29.74% stake.

In 2021, Green Ocean raised RM90.99 million in the equity market through two fundraising exercises. The company undertook a rights issue with warrants that raised RM82.56 million and a private placement exercise that raised RM8.13 million.

Proceeds from the two exercises were earmarked for the company’s glove making business, which it has since exited. As at end-June 2024, RM40.66 million of proceeds from the rights issue and RM7.99 million from the private placement exercise remain unutilised.

For the third quarter ended June 30, 2024, Green Ocean’s net loss shrunk 87% to RM840,000 from RM6.49 million a year earlier. Revenue dropped 41.7% to RM3.25 million versus RM5.58 million.

As at end-June 2024, Green Ocean was in a net debt position with RM15.75 million in total borrowings against cash and bank balance of RM1.47 million.