Khee San jumps 20% on Mamee control

by MARK RAO

KHEE San Bhd’s shares jumped close to 20% after announcing a corporate exercise that will see Mamee-Double Decker (M) Sdn Bhd (Mamee) emerge as its controlling shareholder.

The company was the fourth most actively traded counter on Bursa Malaysia yesterday as 65.88 million shares exchanged hands, driving the company’s share price 19.67% or six sen higher to close at 36.5 sen.

This gave the company a market capitalisation of RM41.76 million for the day.

On Monday, Khee San — the largest candy and sweets manufacturer in Malaysia — announced that it plans to undertake a private placement of 94 million new ordinary shares in the company to Mamee at 25 sen per share.

This will result in Mamee acquiring a 45.11% stake in Khee San which, in turn, will trigger a mandatory takeover offer for the remaining shares not already held by Mamee in the company.

In a filing to Bursa Malaysia, Khee San said the private placement will result in an expeditious injection of cashflow to support the company’s business operations.

The exercise will also allow Khee San and Mamee to leverage on each other’s network of suppliers, distributors and customers, as both groups have established brands that serves different market segments in the food and beverage industry.

The Khee San group is principally involved in the manufacturing of candy and wafer products, including its Fruitplus range of chewy candies and Torrone Barley Mint, while Mamee’s portfolio includes MAMEE Monster, Mister Potato Chips and MAMEE Chef.

Based on the 25 sen subscription price, the private placement will raise RM23.5 million in proceeds, of which RM20 million will be utilised for the repayment of trade and other creditors and/or credit facilities.

Following the exercise, Khee San plans to undertake a renounceable rights issue involving the issuance of 208.4 million rights shares on the basis of one rights share for every one existing Khee San share held on the entitlement date post-private placement.

At an indicative issue price of 18 sen per share, the rights issue will raise RM37.51 million in proceeds.

Collectively, both exercises will raise a total of RM61.01 million in funds. Of this, RM45 million will be used to partially repay outstanding debts owed to creditors and banks/financial institutions.

At Sept 30 this year, Khee San’s outstanding debts owed to creditors and banks/financial institutions amounted to RM47.1 million and RM78.4 million respectively.

The two proposals are expected to be completed in the first half of 2020.

Meanwhile, Scomi Group Bhd fell into Practice Note 17 (PN17) status after Bursa Malaysia Securities Bhd rejected its application for a waiver from being classified as a PN17 company — an affected listed issuer.

This was on concerns over the sustainability and growth potential of the company’s existing business and its ability to generate sufficient revenue (and thus profitability), among other concerns cited.

The service provider for oil and gas and transport industries now has 12 months from Aug 30 this year to submit a regularisation plan to the relevant authority, it said in an exchange filing yesterday.

Shares of Scomi plunged 25% or 1.5 sen yesterday, the biggest move for the company in approximately six months, to close at 4.5 sen for a market capitalisation of RM43.21 million. A total of 16.17 million shares in the company were traded.

Scomi, which posted consolidated net losses in the past three financial years, said it’s in the middle of formulating a plan to regularise its financial condition.

Separately, the company announced that its proposed share consolidation and listing of warrants and new shares were approved by Bursa Securities.

The share consolidation is geared at improving the company’s capital structure and facilitating the proposed issuances in question.