This article first appeared in The Edge Financial Daily, on June 10, 2016.

KUALA LUMPUR: Malaysia Building Society Bhd (MBSB) has fixed the issue price of its rights issue at RM1 each, on the entitlement basis of one rights share for every one existing MBSB share held.

In an announcement to Bursa Malaysia, MBSB said the board had resolved to fix the issue price of the rights shares at RM1 each, of which the first call of 59 sen for each rights share will be payable in cash on application, while the second call of 41 sen for each rights share will be capitalised from MBSB’s share premium account.

Being the single largest shareholder with a 64.89% stake, the Employees Provident Fund (EPF) will pump RM1.089 billion into MBSB for subscription to its cash call.

“MBSB had obtained an irrevocable written undertaking dated March 10, 2016, from its major shareholder EPF, to subscribe in full to its entitlement under the rights issue, based on its shareholding of 1.848 billion MBSB shares as at March 4, 2016,” the announcement said.

Meanwhile, tycoon Tan Sri Chua Ma Yu, the second-largest shareholder, would need to fork out RM101.4 million for the cash call should he decide to subscribe to the rights issue.

The first call of 59 sen represents a discount of 29 sen or approximately 33% to the theoretical ex-rights price of MBSB shares of 88 sen, based on the five-market day volume weighted average price of MBSB shares up to and including June 8, being the last trading date prior to the date of this announcement, of RM1.1739, said the announcement.

In addition, MBSB also announced that it entered into a managing and underwriting agreement yesterday with joint managing underwriters, namely AmInvestment Bank Bhd and RHB Investment Bank Bhd, as well as joint underwriters, namely AmInvestment Bank, RHB Investment Bank, Affin Hwang Investment Bank Bhd, Maybank Investment Bank Bhd and MIDF Amanah Investment Bank Bhd, to underwrite the remaining portion of 1.051 billion rights shares, representing 36.3% of the total issue size of the rights issue, based on the first call of 59 sen per rights share that is not covered by the EPF’s undertaking.

MBSB dropped two sen or 1.67% to RM1.18 yesterday, with a market capitalisation of RM2.85 billion.