Yen Global makes cash call, eyes diversification into ICT business
Update Date：2016-11-23 9:32:33 Source：Tannet (Malaysia) Sdn Bhd Views：772
KUALA LUMPUR: Yen Global Bhd has proposed a rights issue with warrants to raise up to RM55mil, most of which will be used to diversify into information and communication technology (ICT).
In a filing with Bursa Malaysia, the loss-making apparel maker also proposed to reduce the par value of its shares from 50 sen each to 10 sen each. This would give rise to credit of RM55mil, which will wipe out its accumulated losses of about RM43.2mil.
The proposed diversification followed the emergence of connectivity solutions provider Green Packet Bhd as a substantial shareholder in Yen Global recently.
The Edwin and Mustang jeans manufacturer said it planned to issue up to 275 million rights shares on a 2-for-1 basis, together with three free warrants for every four rights shares subscribed, after undertaking the par value reduction.
At an indicative issue price of 20 sen per rights share, the proposed rights issue would raise between RM48.6mil and RM55mil.
Yen Global said the lion’s share of the proceeds -- ranging from RM33.02mil to RM37.11mil depending on the subscription level -- would be used to expand the group’s ICT business under wholly-owned Atilze Digital Sdn Bhd.
Atilze is mainly involved in the sale of ICT equipment and devices, and Internet of Things (IoT) products and services.
Green Packet had in August bought a 22% stake in Yen Global with an eye towards Atilze Digital, the authorised South-East Asia distributor of broadband, long-term evolution and IoT products of Taiwan-listed Gemtek Technology Co Ltd.
Most of the ICT/Atilze allocation would be for developing IoT gateway and service platform as well as connected car equipment, said Yen Global.
Yen Global’s existing apparel business will also be expanded using part of the rights issue proceeds.
The company said RM2.88mil would be allocated to expand its existing business of manufacturing its in-house jeans brands such Edwin, Mustang and GA Blue.
Of this amount, the group plans to invest RM875,000 in a new line of products under the Edwin brand including trendy schoolbags and backpacks.
Yen Global also plans to launch a line of “revolutionary” jersey material jeans, which are stretchable and lighter than standard jeans, in the Malaysian market.
In addition, the group said it would invest RM1.5mil to open three new retail outlets -- two in Penang and one in Kuching.
Yen Global shares closed unchanged at RM1.10 on Tuesday.
TAGS / KEYWORDS:Corporate News , Technology , Yen Global Bhd , Green Packet Bhd
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