S P Setia to raise up to RM1.18b from rights issue

KUALA LUMPUR (April 28): Property developer S P Setia Bhd has proposed to undertake a renounceable rights issue of new class C Islamic redeemable convertible preference shares (RCPS-i C) to raise up to RM1.18 billion on an entitlement date to be determined later.

The group intends to utilise the gross proceeds raised from the proposed exercise to redeem all outstanding RCPS-i B which were issued in December 2017 and to repay borrowings. As at April 8, 2022, it had 1.18 billion RCPS-i B amounting to RM1.04 billion in issue.

To recap, the RCPS-i B were issued pursuant to the company’s rights issue exercise undertaken in 2017, which raised gross proceeds amounting to RM2.13 billion that have been fully utilised to finance the acquisition of I&P Group Sdn Bhd, property development costs of new and ongoing projects of the enlarged group and for working capital.

The latest fundraising exercise will involve the issuance of RCPS-i C based on an illustrative entitlement basis of three RCPS-i C for every 10 existing shares held. These RCPS-i C will be converted into new shares at an illustrative conversion ratio of 11 new shares for every 18 RCPS-i C held or at an implied conversion price of RM1.39 for every new share, using an illustrative issue price of 85 sen per RCPS-i C.

SP Setia said the proposed rights issue is expected to raise RM850 million under the minimum scenario and up to RM1.18 billion under the maximum scenario.

Based on the intended gross proceeds and 4.07 billion shares in issue as at April 8, 2022, the capital outlay required from a shareholder holding 1,000 shares who wishes to subscribe for his/her entitlement is approximately RM255.

"The actual capital outlay required by the shareholders to fully subscribe for their entitlements under the proposed rights issue will depend on the actual entitlement basis and the issue price for the RCPS-i C to be determined by the board and announced by the company later," said SP Setia in a bourse filing on Wednesday (April 27).

In order to meet the minimum subscription level, the company has already procured irrevocable written undertakings from Permodalan Nasional Bhd (PNB) — being a major shareholder of SP Setia with a 26.06% stake — and AmanahRaya Trustees Bhd to subscribe in full for their entitlement under the proposed rights issue.  

AmanahRaya Trustees is the trustee for the funds under PNB’s management, which collectively hold a 35.44% stake in SP Setia.

"As the proposed rights issue is expected to be completed in the fourth quarter of 2022, it is not expected to have any material effect on the group's earnings and earnings per share for the financial year ending Dec 31, 2022," said SP Setia.

To facilitate the implementation of the proposed rights issue, the company is proposing to amend the constitution of the company.

RHB Investment Bank Bhd has been appointed as the principal adviser for the proposals, while Amanie Advisors Sdn Bhd is the shariah adviser for the proposed rights issue.

SP Setia shares closed 2 sen or 1.61% lower at RM1.22 on Wednesday, bringing it a market capitalisation of RM4.96 billion.

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