KUALA LUMPUR (July 26): Industrial tape and label stock maker Central Global Bhd has proposed to undertake a bonus issue of up to 216 million new shares on the basis of two bonus shares for every one existing share on an entitlement date to be determined later.

In a bourse filing today, Central Global said the maximum number of 216 million bonus shares was arrived at after taking into account its existing issued shares of 91 million shares as at July 21 and assuming completion of a private placement of the remaining 17 million shares to third party investors prior to the entitlement date. 

It added that the share price adjusted for the proposed bonus issue should not be less than 50 sen based on the daily volume weighted average price (VWAP) of Central Global shares during the three-month period before the application date.

Based on the five-day VWAP of Central Global shares up to July 23 and the lowest daily VWAP of its shares during the past three-month period up to and including July 23, the theoretical ex-bonus price for its shares is expected to be between 51.25 sen and 53.16 sen.

Central Global noted that the proposed bonus issue is the most appropriate avenue to reward existing shareholders as it will enlarge the number of shares held by them while maintaining their percentage of equity shareholding in the company.

Additionally, it will encourage trading liquidity of the company's shares on Bursa Malaysia via a greater participation of broader range of investors with the increase in the number of shares.

Central Global is also proposing free warrants issue of up to 162 million free warrants on the basis of one warrant for every two existing shares.

For illustrative purposes, the gross proceeds to be raised upon the full exercise of the warrants based on the indicative exercise price of 50 sen each amounts to RM81 million, which it intends to use for working capital.

The proposed free warrants issue is conditional upon the proposed bonus issue of shares, but not vice versa. Both proposals are not expected to have any material effect on the group's earnings for the financial year ending Dec 31, 2021.

Both proposals are expected to be completed by the third quarter of 2021. TA Securities Holdings Bhd is the adviser for the proposals.

At the same time, Central Global is proposing to establish a long-term incentive scheme of up to 15% of the total issued shares, comprising a share option scheme and a share grant scheme, for eligible employees, executive directors and non-executive directors of the company and its non-dormant subsidiaries.

Central Global shares closed up 14 sen or 8.86% at RM1.72 today, bringing a market capitalisation of RM156.52 million.