KUALA LUMPUR (Oct 21): Candy maker Khee San Bhd (KL:KHEESAN) said its shareholders have approved the company's regularisation plan to exit Practice Note 17 (PN17) status.

According to the company's bourse filing, all eight resolutions relating to the regularisation plan were passed at an extraordinary general meeting (EGM) on Monday.

The regularisation plan includes a proposed rights issue with warrants, a scheme of arrangement with creditors, a share capital reduction and the establishment of an employee share scheme (ESS) of up to 15% of its share base for eligible directors and employees.

The rights issue involves the issuance of up to 960.96 million shares and up to 549.12 million warrants on the basis of four warrants for every seven right shares subscribed.

With the rights shares priced at 10 sen each, the exercise is expected to raise between RM65 million on a minimum subscription basis and RM96.1 million under a maximum scenario. From the amount raised, RM51.2 million will be allocated to settling amounts owed to scheme creditors.

In addition, Khee San will also undertake a RM137.52 million capital reduction to its share capital.

In November 2021, Khee San slipped into PN17 status after its wholly-owned subsidiary Khee San Food Industries Sdn Bhd was placed under judicial management, following an application by Maybank Islamic Bhd.

The company has reported profits for the past seven consecutive quarters.

In a separate statement, Khee San said the measures proposed by the company are expected to strengthen its financial position to ensure it can meet its obligations and to pursue growth opportunities.

"The approval of the regularisation plan is a significant step forward for Khee San. With a solid plan for financial recovery, we are confident that the group is on the right path toward long-term success,” said Khee San executive chairman Yong Loong Chen.

Khee San's largest shareholder is Ta Win Holdings Bhd executive director Datuk Seri Ngu Tieng Ung, with a stake of about 23.16% held mainly via Timur Enterprise Sdn Bhd.

Ngu has indicated he is willing to undertake at least RM16.02 million worth of right shares.

Shares in Khee San closed up two sen or 8.3% to 26 sen on Monday, giving the company a market capitalisation of RM35.69 million.

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