KUALA LUMPUR (Sept 27): Signature International Bhd (KL:SIGN) plans to transfer its ownership in the two subsidiaries it wants to spin off for a listing into a newly formed entity, Signature Alliance Group Bhd (SAG), and then offer 26% of SAG's enlarged share base to the public via an initial public offering.

The two subsidiaries are its 51%-owned renovation company Space Alliance Contracts Sdn Bhd (SAC) and 50.1%-owned interior fit out business that focuses on commercial projects, Zig Zag Builders (M) Sdn Bhd (ZZB). 

The remaining 49% shareholding in SAC is owned by Chang Chung Fei and Ng Mun Woh. As for ZZB, Foo Khai Shin holds the balance 49.9% stake.

Signature, together with the other owners of SAC and ZZB, inked conditional share sale agreements with SAG to transfer the ownership of SAC and ZZB in exchange for shares in SAG worth RM38.1 million, it said in a bourse filing on Friday.

SAG, which was formed Jan 10 this year and currently has two shares held by Chang, will issue about 592 million new shares to the owners of SAC at an issue price of 5.16 sen each to take over SAC for RM30.5 million. It will issue another 148 million new shares to the owners of ZZB at the same price to acquire ZZB for RM7.6 million.

On completion of the acquisitions, SAC and ZZB will be wholly-owned by SAG, while Signature will control 50.8% of SAG, with Chang holding 27.4%, Ng owning 11.8% and Foo having 10%.

On the same day the acquisition agreement was signed, Signature, Chang, Foo and Ng inked a conditional share sale agreement among themselves to reorganise their shareholdings in SAG. Signature will end up holding 50.7% of the stake in SAG, while Chang will have 22.2%, Foo will get 17.6% and Ng will have 9.5%.

The proposals are conditional upon approval from authorities for the proposed listing of SAG, while the shareholding reorganisation is conditional upon the completion of the acquisitions. 

For the proposed IPO, SAG will issue 260 million IPO shares that represent about 26% of its enlarged share base at an issue price to be fixed. Of the 26%, 5% (50 million shares) will be set aside to be subscribed by the Malaysian public, 3% (30 million) by SAG's eligible employees and 2% (20 million) by Signature's shareholders.

The balance IPO shares will be placed out to Bumiputera investors approved by the Ministry of Industry and Trade (12.5% or 125 million) and selected investors (3.5% or 35 million).

Post-IPO — the proceeds of which will accrue entirely to SAG — Signature’s stake in SAG will be reduced to 37.5%, while Chang's will drop to 16.4%, Foo's to 13.1%, and Ng’s to 7%.

SAG plans to use the listing proceeds to buy land in Selangor to set up a new corporate office and production facility, establish branch offices in Penang and Johor, repay bank borrowings and for working capital.

Signature expects the proposals to be completed by the second quarter of 2025.

Its share price rose one sen or 0.8% to RM1.22 on Friday, bringing the group a market capitalisation of RM788 million.