1.INTRODUCTION
On behalf of the Board of Directors of Hexza (“Board”), OSK Investment Bank Berhad (“OSK”) wishes to announce that Hexza is proposing a bonus issue of up to 68,150,845 Hexza Shares (“Bonus Share(s)”) to be credited as fully paid-up on the basis of one (1) new Hexza Share for every two (2) existing Hexza Shares held on an entitlement date to be determined later (“Entitlement Date”).
2.DETAILS OF THE PROPOSED BONUS ISSUE
2.1Number of Shares to be issued
Based on the issued and paid-up share capital of the Company as at 30 June 2008 of 132,001,691 Hexza Shares and assuming the full exercise of all the outstanding Executive Share Option Scheme (“ESOS Options”) as at 30 June 2008 amounting to 4,300,000 ESOS Options, up to 68,150,845 Bonus Shares will be issued on the basis of one (1) Bonus Share for every two (2) existing Hexza Shares held.
The actual number of Bonus Shares to be issued will depend on the issued and paid-up share capital of the Company on the Entitlement Date.
2.2Capitalisation of reserves
The Proposed Bonus Issue is to be effected by way of capitalising the Company’s share premium and retained earnings.
The share premium and retained earnings of the Company based on its latest audited accounts for the Financial Year Ended (“FYE”) 30 June 2007 amounted to approximately RM15.09 million and RM37.38 million respectively. Meanwhile, the unaudited share premium and retained earnings of the Company based on the Company’s latest unaudited quarterly results for the FYE 30 June 2008 is approximately RM15.14 million and RM44.70 million respectively. The amount to be capitalised from the share premium and retained earnings, including the balances after the capitalisation, on a minimum and maximum scenario are set out in Table 1 in the Tables section of this announcement.
The Board confirms that the Company’s share premium and retained earnings to be capitalised for the purpose of the Proposed Bonus Issue are unimpaired by losses on a consolidated basis.
2.3Ranking of Bonus Shares
Upon allotment and issuance, the Bonus Shares will rank pari passu in all respects with the existing issued and paid-up Hexza Shares.
2.4Listing of and quotation of Bonus Shares
Subject to the relevant approvals being obtained, an application will be made to Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for the Bonus Shares on the Main Board of Bursa Securities.
3.RATIONALE FOR THE PROPOSED BONUS ISSUE
The Proposed Bonus Issue will increase Hexza’s share capital base to better reflect the size of the operations of Hexza and its subsidiaries (“Group”) and also to reward its shareholders for their support and loyalty to the Group. The Proposed Bonus Issue will also result in a larger spread in number of shares and enhanced its liquidity.
4.ADJUSTMENT TO ESOS OPTIONS
Any necessary adjustments arising from the Proposed Bonus Issue pursuant to the terms of the unexercised ESOS Options will be governed by the provisions of the bye-laws for the ESOS. Hence, any adjustments required will only be determined on the Entitlement Date for the Proposed Bonus Issue and will be effective from the commencement of the following market day (a day on which Bursa Securities is open for trading in securities).
A notification to holders of ESOS Options explaining the mechanism of any adjustments to the unexercised ESOS Options will be issued by the Company immediately after finalization of the necessary adjustments on the Entitlement Date.
5.EFFECTS OF THE PROPOSED BONUS ISSUE
5.1Issued and paid-up share capital
The effects of the Proposed Bonus Issue on the issued and paid-up share capital of Hexza are set out in Table 2 in the Tables section of this announcement.
5.2Net Assets
The proforma effects of the Proposed Bonus Issue on the consolidated net assets (“NA”) per share based on the latest audited accounts of Hexza, on a minimum and maximum scenario basis, are set out in Table 3 in the Tables section of this announcement.
5.3Earnings
The Proposed Bonus Issue will not have any effect on the Group’s earnings except that the Group’s earnings per share will correspondingly be diluted as a result of the increase in the number of Shares of the Company.
5.4Substantial shareholders’ shareholding
The Proposed Bonus Issue will not have any effect on the percentage of the substantial shareholders’ shareholdings in Hexza except for the proportionate increase in the number of Hexza Shares held in the Company
5.5Dividends
Hexza has, subject to shareholders approval, announced a first and final dividend of 4.0%, less tax plus 3% tax-exempt for the FYE 30 June 2008 on 29 August 2008.
The Bonus Shares will be intitled to the proposed dividend, and hence the Board will ensure that the Entitlement Date for the proposed dividend will be fixed after the Bonus Shares have been allotted to the entitled shareholders.
Barring any unforeseen circumstances, it is the Board’s intention to maintain its dividend policy for the foreseeable future. Notwithstanding this, any future dividend to be declared by Hexza will depend on, amongst other factors, the profitability and cashflow position of Hexza in the future.
5.6Gearing
The Proposed Bonus Issue will not have any effect on the gearing of Hexza.
6.APPROVALS REQUIRED
The Proposed Bonus Issue is subject to the following approvals being obtained:-
(i)shareholders of Hexza at an extraordinary general meeting to be convened; and
(ii)Bursa Securities for the listing of and quotation for the Bonus Shares on the Main Board of Bursa Securities.
7.INTEREST OF DIRECTORS, MAJOR SHAREHOLDERS AND/OR PERSONS CONNECTED
None of the Directors and/or major shareholders of Hexza and/or persons connected to them have any interest, direct or indirect, in the Proposed Bonus Issue other than that derived as a shareholder of Hexza.
8.DIRECTORS’ RECOMMENDATION
After considering all aspects of the Proposed Bonus Issue, the Board of Hexza is of the opinion that the Proposed Bonus Issue is in the best interest of the Company.
9.ADVISER
OSK has been appointed by the Company to act as the Adviser for the Proposed Bonus Issue.
10.APPLICATION TO BURSA SECURITIES
The application to Bursa Securities for the listing of and quotation for the Bonus Shares is expected to be made within two (2) months from the date of this announcement.
This announcement is dated 29 August 2008