A bold move is afoot in the world of business, and it's got everyone talking! The major shareholder of DKSH Holdings, a prominent distributor of top-tier brands, has proposed a game-changing plan to take the company private.
But here's where it gets controversial: they're offering a premium price of RM6.15 per share, which is nearly 17% higher than the recent closing price. This move has sparked curiosity and raised some eyebrows in the business world.
DKSH Resources, which currently owns a significant 74.3% stake in the company, plans to initiate a selective capital reduction and repayment (SCR) exercise worth a whopping RM249.1 million. The SCR will cover 40.5 million shares, which is a substantial 25.7% of the company's issued share capital.
Now, here's the interesting part: the repayment amount exceeds the company's paid-up capital. To address this, DKSH Resources has proposed issuing approximately 58 million bonus shares from retained earnings. This move will increase the share capital, allowing for the reduction in capital required for the SCR. However, the number of bonus shares per shareholder remains undisclosed.
According to DKSH Resources, the payout will be funded through a combination of internal cash, borrowings, and an advance from the major shareholder itself. As of September, the group had RM50.9 million in cash and bank balances, with total borrowings of RM536.6 million.
And this is the part most people miss: after the exercise, DKSH Resources has no plans to keep the company listed. They believe that the SCR provides shareholders with a timely opportunity to exit at a premium, especially considering the persistently low trading liquidity and a volatile operating environment.
DKSH Holdings shares have historically been illiquid, with an average daily volume of just 48,492 shares over the past three years. This represents a mere 0.12% of its free float, which is a concern for many investors.
"This presents entitled shareholders with a unique opportunity to cash out at a premium, especially in these uncertain geopolitical and macroeconomic times," DKSH Resources stated.
The major shareholder also highlighted the heightened global risks and reduced business visibility ahead. This proposal is now under deliberation by the company's board of directors, and trading in DKSH Holdings was suspended on Tuesday, pending the announcement.
So, what do you think? Is this a wise move or a risky venture? Share your thoughts in the comments below! The business world is always eager for new perspectives.
