News
BURSA MALAYSIA BERHAD ("BURSA" OR "COMPANY") PROPOSED DISTRIBUTION OF RM416.0 MILLION IN CASH TO ALL SHAREHOLDERS ("PROPOSED DISTRIBUTION")
BackAug 01, 2005
| General Announcement Reference No MM-050801-42255 |
| Submitting Merchant Bank | : | COMMERCE INTERNATIONAL MERCHANT BANKERS BERHAD |
| Company Name | : | BURSA MALAYSIA BERHAD |
| Stock Name | : | BURSA |
| Date Announced | : | 01/08/2005 |
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| Type | : | Announcement |
| Subject | : | BURSA MALAYSIA BERHAD ("BURSA" OR "COMPANY") PROPOSED DISTRIBUTION OF RM416.0 MILLION IN CASH TO ALL SHAREHOLDERS ("PROPOSED DISTRIBUTION") |
Contents :
1. INTRODUCTION
We are pleased to announce that Bursa's Board of Directors has today approved the proposed distribution of RM416.0 million in cash by Bursa to its shareholders.
2. DETAILS OF THE PROPOSED DISTRIBUTION
Bursa proposes to distribute cash amounting to RM416.0 million to shareholders as at an entitlement date to be determined. The Proposed Distribution will involve a two (2)-step process whereby Bursa will first implement a bonus issue of 832.0 million new ordinary shares of RM0.50 each ("Bursa Shares") ("Proposed Bonus Issue") and thereafter, immediately cancel the new Bursa Shares issued under the Proposed Bonus Issue under Section 64 of the Companies Act, 1965. The Proposed Bonus Issue will be capitalised from the share premium account of Bursa.
As at 30 June 2005, Bursa had RM428,576,304 in its share premium account. Following the Proposed Distribution, the amount in the share premium account will be reduced to RM12,576,304. However, as at 30 June 2005, Bursa has outstanding employee share options over 11,692,800 Bursa Shares. The balance in the share premium account following the Proposed Distribution will depend on the rate Bursa's employees exercise their options. The basis for the cash distribution per share will depend on the number of outstanding Bursa Shares as at the entitlement date for the Proposed Distribution. The Board of Directors of Bursa will deal with fractions of a Bursa Share or sen arising from the Proposed Distribution as they may deem fit, in the best interest of the Company.
For illustration purposes, based on the number of issued and paid-up shares of Bursa of 502,712,200 shares as at 30 June 2005, for every one (1) existing Bursa Share, shareholders will be entitled to approximately 1.66 new Bursa Shares under the Proposed Bonus Issue, which will subsequently be cancelled and the shareholders will receive a cash distribution of approximately RM0.83 per Bursa Share held before the Proposed Bonus Issue.
As at 30 June 2005, Bursa had RM428,576,304 in its share premium account. Following the Proposed Distribution, the amount in the share premium account will be reduced to RM12,576,304. However, as at 30 June 2005, Bursa has outstanding employee share options over 11,692,800 Bursa Shares. The balance in the share premium account following the Proposed Distribution will depend on the rate Bursa's employees exercise their options. The basis for the cash distribution per share will depend on the number of outstanding Bursa Shares as at the entitlement date for the Proposed Distribution. The Board of Directors of Bursa will deal with fractions of a Bursa Share or sen arising from the Proposed Distribution as they may deem fit, in the best interest of the Company.
For illustration purposes, based on the number of issued and paid-up shares of Bursa of 502,712,200 shares as at 30 June 2005, for every one (1) existing Bursa Share, shareholders will be entitled to approximately 1.66 new Bursa Shares under the Proposed Bonus Issue, which will subsequently be cancelled and the shareholders will receive a cash distribution of approximately RM0.83 per Bursa Share held before the Proposed Bonus Issue.
3. RATIONALE FOR THE PROPOSED DISTRIBUTION
The Proposed Distribution is part of Bursa's capital management plan to repay capital in excess of its operational needs to its shareholders. This is aimed at creating value to shareholders by enabling shareholders to utilise Bursa's excess capital for their respective investment needs. The Proposed Distribution is also expected to increase the return on equity of Bursa. The Proposed Bonus Issue is merely a means to facilitate the Proposed Distribution.
4. EFFECTS OF THE PROPOSED DISTRIBUTION
4.1 Share capital and major shareholders' shareholdings
The Proposed Distribution will not have any effect on Bursa's share capital and major shareholders' shareholdings.
4.2 Net tangible assets ("NTA")As shareholders will receive a repayment from the capital of the Company, the Proposed Distribution will reduce Bursa's consolidated NTA by RM416.0 million. The corresponding reduction in the consolidated NTA per share will depend on the number of shares in issue as at the entitlement date for the Proposed Distribution. Based on the number of issued and paid-up shares of Bursa of 502,712,200 shares as at 30 June 2005, the Proposed Distribution will result in a reduction in the consolidated NTA per share of approximately RM0.83 per share, which is equivalent to the amount of cash received per share by shareholders under the Proposed Distribution.
4.3 Earnings
The Proposed Distribution will reduce Bursa's earnings as a result of the reduction in interest income to be generated with the RM416.0 million proposed to be distributed. Based on the average gross return on investment of Bursa's portfolio (excluding capital gains) of approximately 4% per annum, the Proposed Distribution is expected to result in a decrease in interest income by approximately RM16.64 million per annum.
However, given that the Proposed Distribution is expected to be completed towards the end of 2005, the Proposed Distribution is not expected to have any material effect on Bursa's consolidated earnings for the financial year ending 31 December 2005.
4.4 Dividends
The Proposed Distribution will not have any impact on the dividend policy of Bursa as stated in its Prospectus dated 23 February 2005.
5. APPROVALS REQUIRED
The Proposed Distribution is subject to the following approvals:
(i) shareholders of Bursa; and
(ii) the High Court of Malaya.
(ii) the High Court of Malaya.
6. MAJOR SHAREHOLDERS' AND DIRECTORS' INTEREST
None of Bursa's Directors and/or major shareholders and/or persons connected with Bursa's Director and/or major shareholder has any interest, direct or indirect, in the Proposed Distribution other than that derived as a shareholder of Bursa.
7. STATEMENT BY THE DIRECTORS
After considering all aspects of the Proposed Distribution, Bursa's Board of Directors is of the opinion that the Proposed Distribution is in the best interest of Bursa.
8. ADVISER
Bursa has appointed Commerce International Merchant Bankers Berhad as the adviser for the Proposed Distribution.
9. ESTIMATED TIMEFRAME FOR COMPLETION
The Proposed Distribution is expected to be completed by the end of 2005 barring any unforeseen circumstances and subject to all the required approvals being obtained.
This announcement is dated 1 August 2005.