On Sep 26, 2024, HCK entered into an agreement with Hii and Global Activate Sdn Bhd (GASB) to make partial settlement of a RM113.3 million payable by GASB via the issuance of 47.2 million settlement shares Hii at an issue price of RM2.1161 each.
HCK's share price closed unchanged at RM2.12 on Thursday with its market capitalisation valued at RM1.16 billion.
Global Activate Sdn Bhd owes Hii RM113.35 million debt.
HCK said its indirect wholly-owned subsidiary entered into an agreement with Hii to issue 47.26 million new shares at RM2.1161 each to pay off RM100 million of the debt owed.
Global Activate's debt to Hii will then be trimmed to RM13.35 million.
Upon completion of the proposed debt settlement, Hii's shareholding in HCK will increase to 59.75 per cent from 56.28 per cent.
According to HCK, the debt currently owed by Global Activate to Hii stemmed from cash advances it obtained from him that amounted to RM119.49 million between March 30, 2016 and July 10, 2023. " These advances were provided by Hii to partially finance the working capital requirements of Global Activate's mixed development project called Edusentral as well as for the repayment of borrowings," it said in a filing with Bursa Malaysia.
The issuance of the settlement shares is expected to strengthen HCK's equity base and net assets from RM357.14 million to RM461.41 million and reduced its gearing ratio from 1.24 times to 0.96 times under the minimum scenario, assuming none of the warrants are exercised prior to the share issuance.
The proposed debt settlement is expected to be completed by the fourth quarter of 2024.
UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the principal adviser for the proposed debt settlement.