KUALA LUMPUR (Nov 7): SYF Resources Bhd is proposing to raise up to RM85.83 million via a renounceable rights issue with free warrants to fund its existing and future property development projects. The money raised will also be used to repay bank borrowings.

As at Nov 6, the principal amount of its borrowings stood at about RM76.38 million.

In a stock exchange filing, SYF said the cash call will be undertaken on the basis of one rights share with one
free warrant for every two existing SYF Resources shares held at an entitlement date to be fixed. The exercise, the group said, will involve up to 451.72 million right shares and a corresponding amount of free detachable warrants.

"Notwithstanding the above, the board is of the opinion that none of the Warrants 2014/2019 (existing warrants) is
expected to be exercised due to them being out-of-the-money as the exercise price of Warrants 2014/2019 is 70 sen whereas the closing price of SYF Shares as at the last practicable date (Nov 6) was 20 sen, and the said warrants will expire on Dec 11, 2019," it said.

So, as opposed to the RM85.83 million that could be raised in the maximum scenario, the group expects to raise RM56.28 million in the minimum scenario, where none of its treasury shares is resold into the market prior to the implementation of the exercise, and none of the outstanding ESOS options granted and existing warrants are exercised into new shares.

This is based on the issue price of 19 sen apiece for the rights shares, which represents a discount of about 4.19% to the five-day volume-weighted average market price (5D-VWAP) of SYF Resources shares up to Nov 6, which is 19.83 sen. The exercise price of the free warrants has also been fixed at 19 sen apiece.

The group said it has procured irrevocable written undertakings from its shareholders, Datuk Seri Chee Hong Leong and Insas Bhd, collectively known as the undertaking shareholders, to subscribe in full for their respective entitlements under the proposed rights issue with warrants.

Collectively, the undertaking shareholders will subscribe for 14.8% or 43.84 million of right shares based on the minimum scenario of 296.2 million right shares available for subscription.

Chee, also an executive director of SYF Resources, is entitled to subscribe for 18.83 million rights shares (6.36%), while Insas is entitled to subscribe for 23.77 million rights shares (8.02%) via Insas Plaza, and 1.24 million rights shares (0.42%) via Montego Assets.  

According to the group's filing, Datuk Seri Thong Kok Khee, an ex director of SYF, has deemed 8.44% interests in SYF via Insas.