Vsolar's major shareholder cuts undertaking for rights shares by more than half

KUALA LUMPUR (March 6): Vsolar Group Bhd's major shareholder Asiabio Capital Sdn Bhd has reduced its undertaking commitment to subscribe for the company's rights shares by more than half to RM3 million from RM6.3 million previously.

On Dec 6 last year, it had provided an irrevocable written undertaking to subscribe for RM6.3 million in value of the rights shares via its entitlement and excess application, if required.

In a bourse filing, Vsolar said the move is in view of the recent market price performance of Vsolar shares, which have been on a downward trend.

"The board of directors has noted that if the issue price of the rights shares are fixed below the indicative issue price of 5 sen, the undertaking may result in Asiabio Capital triggering a mandatory general offer obligation pursuant to the rules, under the minimum scenario.

"Notwithstanding the reduced undertaking commitment, the minimum scenario remains unchanged as the board will secure underwriting arrangements for the remaining RM5.2 million. Other terms of the proposed rights issue with warrants remain unchanged," it added.

Assuming an indicative issue price of 5 sen per rights share, the proposed rights issue with warrants will raise gross proceeds of between RM8.2 million and RM65.9 million. The proceeds will be used as capital expenditure for development and construction of biomass plants and for working capital.

The proposed renounceable rights issue entails up to 1.32 billion new shares, together with up to 878.63 million free detachable warrants, on the basis of three rights shares for every one existing share held. This comes along with two free warrants for every three rights shares subscribed at an entitlement date to be determined later. The exercise is expected to be completed in the first half of this year.

Vsolar shares closed up 5 sen or 16.67% at 3.5 sen today, with 192.1 million shares done, bringing a market capitalisation of RM14.38 million.