Scientex proposes selective capital reduction to take SciPack private

KUALA LUMPUR: Scientex Bhd has proposed to privatise its subsidiary, Scientex Packaging (Ayer Keroh) Bhd (SciPack), via a selective capital reduction and repayment (SCR) exercise.

In a filing with Bursa Malaysia, the group said it had served an offer letter to SciPack’s board on Friday, requesting the company to undertake the SCR pursuant to Section 116 of the Companies Act 2016.

Under the proposal, all SciPack shareholders other than Scientex – which is not entitled to participate – will receive RM1.50 in cash for each ordinary share held. The total cash payout amounts to RM147.82mil.

The exercise will result in the cancellation of all SciPack shares held by entitled shareholders.

Upon completion, Scientex will own 100% of SciPack’s equity, effectively making it a wholly-owned subsidiary.

The group also noted that the existing 550,100 treasury shares held by SciPack will be cancelled following the exercise. The entitlement date for the SCR will be determined and announced later.

Scientex said the proposed SCR, however, is subject to several conditions, including the approval of disinterested shareholders at an extraordinary general meeting to be convened by SciPack.

To pass, the resolution must be supported by a majority in number of disinterested shareholders holding at least 75% in value of the votes cast, while votes against must not exceed 10% of the total voting shares held by such shareholders.

In addition, the exercise requires the sanction of the High Court in Malaya, followed by the lodgement of the court order with the Registrar of Companies.

The proposal is also conditional upon securing approvals, waivers or consents from SciPack’s financiers and creditors if required, as well as from other relevant regulatory authorities or parties.

“The proposed SCR provides amongst others an opportunity for the entitled shareholders to exit and realise their investment in SciPack, eliminate the administrative and compliance costs associated with maintaining the listing status of SciPack and in turn enable resources to be diverted towards improving the core business of SciPack and its subsidiaries, as well as accord Scientex and SciPack (under a privatised form) greater flexibility and operational efficiency in managing and developing the existing business of the SciPack Group,” it said.

The exercise will be funded through internally generated funds and/or bank borrowings by SciPack and is not expected to have a material impact on Scientex’s financial position.