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Berjaya Corporation Bhd (B-Corp) today announced that it is proposing to raise some RM700 million from shareholders.

It is proposing a rights issue on the basis of one five per cent RM1.00 Irredemable Convertible Loan Stock (ICULS) with one warrant for every six B-Corp shares held.

In a statement today, it said this would mean that a B-Corp shareholder holding 6,000 B-Corp shares will be entitled to subscribe for 1,000 five per cent ICULS of RM1.00 each and will also be given 1,000 warrants, free.

The shareholders will need to invest only RM1,000.

The five per cent ICULS of RM1.00 will be convertible into one new B-Corp share of RM1.00.

In the meantime, the five per cent ICULS will earn the holder interest at five per cent per annum.

Similarly, each warrant will entitle the holder to subscribe for one new B-Corp share at RM1.00.

Both, the five per cent ICULS and warrants will have a tenure of 10 years.

The proceeds from the rights issue will be substantially utilised to part repay (RM656.0 million) the loan to be taken for the proposed privatisation of Cosway Corporation Ltd (CCL).

B-Corp had on July 7 announced its intention to privatise CCL by offering its shareholders and ICULS holders HK$1.10 per HK$0.20 share or per HK$0.20 ICULS.

Tan Sri Vincent Tan holds in total, both directly and indirectly, about 445.75 million CCL shares and 565 million CCL ICULS which if sold under the privatisation offer will generate about HK$1.11 billion or about RM431 million at today’s exchange rate.

In addition, Rayvin Tan Yeong Sheik, a son of Tan will also stand to receive about RM191.8 million based on his stake of 227.25 million CCL ICULS and 221.7 million CCL shares.

On the question of what he intends to do with the RM431 million which he stands to receive from the sale of his CCL stakes, Tan revealed that he has given his irrevocable commitment to subscribe in full to the B-Corp rights issue entitlements arising from all the B-Corp shares held by him, both personally and through his private companies.

In addition, he and his son, Rayvin Tan have also committed to apply for excess rights ICULS.

In all, their combined irrevocable undertakings total RM560 million.

Assuming an underwriting fee of say, two per cent, this will save the company RM11.2 million.

B-Corp had also stated in the announcement that it has set RM660 million as the minimum subscription level for the rights issue to succeed.

This means the company will need to procure underwriters for at least RM100 million of the five per cent ICULS.

When asked if he was confident of the participation of underwriters to ensure the success of the rights issue, Tan expressed his hope that the underwriters will take into account his and Rayvin Tan’s undertakings to commit RM560 million as well as the group’s strong underlying fundamentals.

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Berjaya Corp Bhd (BCorp) (3395) has obtained a licence to manufacture passenger and commercial vehicles at a factory to be built in Selangor, but the rights do not cover small cars that the diversified group is more interested in.

BCorp said yesterday that the Ministry of International Trade and Industry’s licence is for the production of commercial vehicles, hybrid cars, electric cars and luxury passenger vehicles.

BCorp wanted to partner China’s BYD Auto to develop 1-litre cars for the domestic and Asean markets at a new factory on 41ha in Bukit Tagar.

BCorp and BYD Auto had signed a memorandum of understanding to develop the latter’s F0 model in February this year.

F0 retails at between US$4,000 (RM13,778) and US$5,000 (RM17,222) in China.

The government, however, does not plan to relax rules under the National Automotive Policy, which only allows new manufacturing licence for cars with capacity of 1.8 litres and above.

A BCorp spokesperson said plans to assemble BYD vehicles had not been shelved.

“Our motor division is still in talks (with BYD on the prospect),” she said when contacted yesterday.

BYD Auto, which counts famous US investor Warren Buffet among its shareholders, is the fourth biggest carmaker in China by volume, after Volkswagen, General Motors and Toyota.

Last year, BYD Auto sold 450,000 vehicles.

Commenting on the licence, BCorp chairman and chief executive officer Tan Sri Vincent Tan said it will provide the group the opportunity to assemble commercial and passenger vehicles locally. This will give it more flexibility and control over quality and pricing of its vehicles.

“Besides strategically complementing and widening our existing range of motor brands, this will also be a good opportunity for Berjaya Corp to promote green technology through the development of hybrid and electric vehicles, which are more environmentally friendly.

“In line with this, we hope to expand our market share and develop a bigger global presence,” Tan said in a statement yesterday.

The Berjaya group has considerable experience in the motor vehicle business, with rights to distribute, market and sell world-renown brands such as Aston Martin, Mazda, Skoda, Mercedes-Benz commercial vehicles and China’s Chana and Jinbei.

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Berjaya Corporation Berhad (BCorp) recorded a higher revenue of RM1.61billion in the first quarter of the financial year ending 30 April 2010 as compared to previous quarter of RM1.49billion. The quarter also registered a higher pre-tax profit of RM184.3million, an increase of 35% compared with a pre-tax profit of RM136.8million previously.

BCorp in their statement that the higher profit was due to improved results recorded in the consumer marketing, financial services and gaming businesses, write-back of impairment in value of investments in associated companies and quoted investments and recognition of negative goodwill, arising mainly from additional investment in Berjaya Land Berhad.

The group’s board previously proposed an interim dividend-in-specie of 15 BMedia shares for every 1,000 BCorp shares held, or equivalent to a dividend rate of 2.35% single-tier exempt dividend per share and a final dividend of 1% single-tier exempt dividend per share in respect of the financial year ended 30 April 2009.

The proposed interim dividend-in-specie and the final dividend are pending approvals of the shareholders of the company. The entitlement date and the payment date of the proposed interim dividend-in-specie as well as the proposed final dividend shall be announced later.

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