KUALA LUMPUR (March 6): Khee San Bhd (KL:KHEESAN) has reached the final stage of its journey to exit Practice Note 17 (PN17) status, as it announced on Friday the successful completion of its debt settlement and share capital reduction to eliminate accumulated losses.

The candy maker, which has been under the PN17 category since November 2021, said it had settled RM72.49 million debt via a scheme of arrangement, which was executed through a combination of share issuance and cash.

This was done by listing 210.61 million shares at 10 sen each in December 2025 to settle RM21.06 million, and payment of RM51.43 million cash from the proceeds of a rights issue completed in the same month that raised RM77.12 million in total.

M&A Securities, acting on behalf of the board, confirmed that the scheme manager has verified full compliance with all obligations under the management.

At the same time, Khee San said its share capital reduction of RM137.52 million to eliminate accumulated losses took effect on Friday.

The company had previously expected to seek fresh shareholder approval after the initial mandate was thought to have lapsed. However, it said in its latest filing that the Registrar of Companies (ROC) has allowed the company to proceed with the exercise without a new vote, noting that no creditors had applied to cancel the resolution for the share capital reduction under Section 118(2) of the Companies Act.

Following the reduction, Khee San's issued share capital has been adjusted to RM72.86 million, down from RM210.4 million.

Khee San first triggered PN17 criteria on Nov 18, 2021, after its wholly owned subsidiary Khee San Food Industries Sdn Bhd, which accounted for over half of its total assets, was placed under judicial management following an application by Maybank Islamic Bhd to put the unit under court-supervised restructuring. The unit was embroiled in a legal battle with several banks over debts owed. 

Shares in Khee San closed half a sen or 4.17% lower at 11.5 sen on Friday, valuing the company at RM123.34 million.