The world's largest glove manufacturer Top Glove Corp is looking to undertake a bonus issue on the basis of two bonus shares for every one existing share held.
It said on Monday the proposed bonus issue is meant to reward shareholders and let them have greater participation in the equity of the group in terms of the number of shares, while retaining their percentage of equity interest held.
Shares in South-east Asia rubber glove makers have rallied in recent months, due to rising demand amid the coronavirus pandemic.
Top Glove executive chairman Lim Wee Chai said that adding and creating value for shareholders has always been a business priority. "This will also enable us to increase the number of shares in issue, which is expected to create more liquidity and marketability for Top Glove shares," he said.
The board of directors is of the view that the proposed bonus issue is the most appropriate avenue to reward existing shareholders while also enhancing the company's capital base. The proposed two-for-one bonus issue is subject to shareholders' approval at an extraordinary general meeting to be convened.
The exercise will see up to 5.48 billion bonus shares issued to shareholders whose names appear in the firm's record of depositors on an entitlement date to be determined.
For illustrative purposes, based on Top Glove shares' three-month volume-weighted average market price of RM13.38 up to July 6, the theoretical ex-bonus share price of the stock is about RM4.46.
The counter on the Malaysia bourse closed at RM24.94, up 12 sen or 0.5 per cent yesterday. On the Singapore Exchange, the dual-listed stock rose nine cents or 1.1 per cent to close at $8.24.
Top Glove said its balance sheet remains "robust", with a net cash position of RM284 million (S$92.4 million) and a shareholders' equity of RM4.7 billion as at May 31, 2020.
Its last bonus issue was completed in October 2018, when its share price reached about RM11.50. The company has completed seven bonus issues and one share split since its listing in 2001.
Separately, the United States Customs last week issued a detention order on Top Glove's disposable gloves, possibly over forced-labour concerns. However, the company said shipments to the US, if returned, would easily be taken up by other nations, Reuters reported on Monday. It said it is engaging the US authorities to find a resolution.
Malaysia exports 99.6 per cent of gloves produced and the US is its largest export market, at 36.3 per cent of total export value in January-March, said Reuters.
THE BUSINESS TIMES