Top Glove proposes 2-for-1 bonus issue

Top Glove said its balance sheet remains "robust", with a net cash position of RM284 million. PHOTO: REUTERS

SINGAPORE (THE BUSINESS TIMES) - 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.

Shares in South-east Asia rubber glove makers have rallied in recent months, due to the boom in demand thanks to the coronavirus pandemic.

Top Glove on Monday (July 20) said the proposed bonus issue is meant to reward shareholders and allow them to have greater participation in the equity of the group in terms of the number of shares, while retaining their percentage of equity interest held.

Lim Wee Chai, executive chairman of Top Glove, 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 added.

The board of directors is thus 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 company'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.

Top Glove's hares continued to climb on Tuesday. The counter on the Malaysia bourse closed at RM24.94, up 12 sen or 0.5 per cent.

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$92.7 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 had reached about RM11.50. The company has completed seven bonus issues and one share split since its listing in 2001.

Separately, the US 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 within a month.

Malaysia exports 99.6 per cent of gloves produced and the United States is its largest export market, at 36.3 per cent of total export value in January-March, said Reuters.

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