KUALA LUMPUR (Oct 30): Minox International Group Bhd (KL:MINOX), a distributor of stainless steel sanitary valves, tubes and fittings, which was listed on the ACE Market of Bursa Malaysia on Oct 17, has proposed to undertake a bonus issue of up to 180 million warrants on the basis of one warrant for every two existing shares in Minox held by qualifying shareholders, on an entitlement date to be determined later.

The proposed bonus issue of warrants is to reward its existing shareholders.

In a filing with Bursa Malaysia on Wednesday, Minox said the proposed bonus issue will also strengthen the group’s financial position and capital base, as the warrants will potentially provide the group with additional working capital as and when the warrants are exercised without incurring interest costs, as compared to bank borrowings. However, the earnings per share is expected to be diluted as a result of the increase in the number of shares arising from the exercise of warrants.

As part of the group’s expansion plans, Minox intends to construct a new warehouse located in Puchong, Selangor, to store its inventories. Such additional storage capacity will increase its total in Malaysia from 1,530 units of standard size pallet, to 2,660 units of standard size pallets. It is in the midst of obtaining approval for the building plan, and construction works are expected to commence by December 2024.

The group intends to fix the exercise price of the warrants at a discount of not more than 20% to the theoretical ex-all price of Minox shares, based on the five-day volume weighted average market price (VWAMP) up to and including the price fixing date.

The proposed exercise would see 540 million bonus shares worth RM107.7 million being issued, assuming all of the 180 million warrants are exercised  at an indicative exercise price of 22 sen — which represents a 19% discount to the five-day VWAMP of Minox shares of 27.16 sen per share as at Oct 23.

The proposed bonus issue is expected to be completed in the first quarter of 2025. M&A Securities Sdn Bhd has been appointed as the principal adviser for the proposed exercise.

At noon market break on Wednesday, Minox shares closed down 0.5 sen or 1.82% at 27 sen, giving it a market capitalisation of RM97.2 million.