KUALA LUMPUR (Sept 26): HCK Capital Group Bhd (KL:HCK) is issuing new shares to settle the bulk of an outstanding RM113.35 million debt that its subsidiary owes its executive chairman Tan Sri Clement Hii Chii Kok @ Hii Chee Kok.

HCK said it has, together with indirect wholly-owned subsidiary Global Activate Sdn Bhd (GASB), entered into an agreement with Hii to issue 47.26 million new shares at RM2.1161 apiece as settlement for RM100 million of the debt owed.

On completion of the share issuance, Hii's shareholding in HCK will increase to 59.75% from 56.28% as at Sept 4, 2024.

GASB's debt to Hii will then be trimmed to RM13.35 million.

The total sum GASB currently owes Hii stemmed from cash advances it obtained from him that amounted to RM119.49 million between March 30, 2016 and July 10, 2023. GASB used the advances to partially finance working capital for its mixed development project Edusentral and to repay borrowings.

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 trim HCK's gearing ratio from 1.24 times to 0.96 times under the minimum scenario — assuming none of its outstanding warrants are exercised prior to the share issuance.

The proposed debt settlement, for which UOB Kay Hian Securities (M) Sdn Bhd has been appointed principal adviser, is expected to be completed by the fourth quarter of 2024.

HCK’s share price closed unchanged at RM2.12 on Thursday, bringing the group a market capitalisation of RM1.16 billion.