EcoWorld International’s proposed capital reduction of RM1.5 bil to facilitate distributions to shareholders

• Datuk Teow Leong Seng, president & CEO: “The proposed capital reduction is a concrete first step towards the realisation of EcoWorld International’s commitment to meet our targeted distribution of RM900 million to our shareholders as earlier announced.”

KUALA LUMPUR (April 28): Eco World International Bhd announced today that the company is undertaking a corporate exercise to reduce RM1.5 billion of its issued share capital pursuant to Section 117 of the Companies Act 2016 (proposed capital reduction). The corresponding credit arising from the proposed capital reduction will be used to setoff against the company’s accumulated losses while the remaining balance will be credited to the retained earnings of the company as illustrated below:

The key rationale for the proposed capital reduction includes:

a. EcoWorld International’s intention to distribute its estimated excess cash of up to RM900 million in 2023, after setting aside funds for the group’s estimated working capital and funding requirements and subject to meeting its sales targets and receiving the relevant approvals (targeted distribution amount);

b. to provide additional headroom for further declaration of dividends by the Company in the future in excess of the targeted distribution amount, arising from sales of the Group’s remaining property units in the UK.

Following the completion of the proposed capital reduction, EcoWorld International intends to declare the first tranche of dividend amounting to at least RM300 million (first tranche dividend) out of the targeted distribution amount. The date of declaration of such dividend will be announced at a later date, subject to completion of the proposed capital reduction and compliance with all applicable laws and regulations.

“The proposed capital reduction is a concrete first step towards the realisation of EcoWorld International’s commitment to meet our targeted distribution of RM900 million to our shareholders as earlier announced. With cash balances of RM910 million as at Jan 31, 2023, EcoWorld International has RM446 million of net cash after setting aside funds to repay the Medium Term Notes due in April and May 2023. As such, the board believes that we are well placed to make a First Tranche Dividend distribution of at least RM300 million to shareholders following the completion of the proposed capital reduction,” said Datuk Teow Leong Seng (pictured), president & CEO of EcoWorld International.

“The proposed capital reduction will only be implemented after full settlement of the MTNs on May 24, 2023. Following this settlement, we will have no more borrowings or gearing. As such, our lenders and bondholders will not be affected by this exercise,” Teow added.

The proposed capital reduction is subject to the approval of the shareholders of the company at an extraordinary general meeting to be convened and any other relevant authorities and/or parties, if required. The date of the EGM will be announced by the company in due course. The proposed capital reduction is expected to be completed by the second half of 2023.

For the avoidance of doubt, the targeted distribution amount is solely an internal target of the management of the company and is not a financial estimate, forecast or projection and has not been reviewed by an external auditor.