KUALA LUMPUR (June 5): XOX Bhd (KL:XOX) said it plans to consolidate every 30 of its shares into one share a month after its proposed share capital reduction to set off its accumulated losses.
In a bourse filing on Wednesday, the loss-making mobile network operator said the share consolidation is part of its plan to improve its capital structure.
“The reduction in the number of shares available in the market may reduce the volatility of the trading price of the shares,” it said.
The proposal is not expected to alter the total value of the shares held by shareholders, according to XOX, with the theoretical share price set to increase by 30 times and the total number of issued shares to be reduced by the corresponding ratio.
Shares of XOX were up half a sen to 1.5 sen at Wednesday's market close, giving it a market capitalisation of RM58.4 million. Based on its last transacted market price, the theoretical-adjusted reference price would be 30 sen apiece.
The issued share capital of the company was RM472.34 million as at June 5, comprising 5.19 billion shares. It also had 77.97 million outstanding irredeemable convertible preference shares (ICPS) and up to 301.87 million options under the employee share option scheme (ESOS).
The issued share capital would be reduced to RM169.34 million, following its share capital reduction proposal in May to set off its accumulated losses of RM303 million. The proposal is expected to be completed in early August subject to shareholders' approval.
Assuming none of the convertible securities are converted into new shares before the book closing date, the 5.19 billion shares will be consolidated into 173.03 million consolidated shares, it said.
Assuming all the convertible securities are converted into new shares, the enlarged number of 5.57 billion shares will be consolidated into 185.69 million consolidated shares, it added.
The share consolidation exercise is expected to be completed by the third quarter of this year, subject to all relevant approvals being obtained.
XOX held several rounds of cash calls over the years, during which it raised nearly RM300 million in the three financial years of 2020, 2021 and 2022, including through share issuance, private placements, four-for-two rights issue of preference shares and ESOS.
This translated into the issuance of nearly four billion shares over the years.
XOX has been in the red for five straight years. For the financial quarter ended March 31, 2024 (2QFY2024), it reported a net loss of RM19.99 million compared to a net profit of RM1.06 million in 2QFY2023, due to fair value adjustments and impairment losses.
Revenue declined 14% year-on-year to RM61.46 million from RM71.83 million, driven by ongoing adjustments in product offerings amid competitive market conditions.
The group is also in a net debt position, with long-term borrowings standing at RM92.62 million against RM26.49 million cash and short-term deposits, as at March 31.