KUALA LUMPUR (Dec 4): ACE Market-listed Focus Dynamics Group Bhd (KL:FOCUS) has proposed a share capital reduction to wipe out up to RM126.8 million of the company’s accumulated losses.

The food & beverage (F&B) outlet operator said the exercise is expected to enhance the group's credibility with its bankers, customers, suppliers, investors and other stakeholders.

“The proposed capital reduction will enable the company to reduce its accumulated losses to more appropriately reflect the value of the underlying assets and financial position of the company and the group," it said in a filing with Bursa Malaysia on Wednesday.

The exercise entails the reduction of up to RM126.8 million of the group's issued share capital via the cancellation of its issued share capital, which is lost and unrepresented by available assets.

The corresponding credit of up to RM126.8 million arising from such cancellation will be used to set-off against its accumulated losses, which stood at RM394.01 million at the end of its latest quarter ended Sept 30, 2024.

As of Nov 25, Focus Dynamics has an issued share capital of RM218.64 million, comprising 6.37 billion shares. The company also has 903.36 million outstanding irredeemable convertible preference shares (ICPS) and 3.07 billion outstanding warrants.

In 2020, Focus Dynamics exercised a rights issue of up to 2.04 billion ICPS that came with free warrants on the basis of three warrants for every two ICPS subscribed, raising RM112.44 million. Following that, the group in 2022 increased its issued and paid-up share capital from RM99.56 million to RM218.64 million by way of an issuance of 216.5 million new ordinary shares from the conversion of 1.08 billion ICPS at the conversion price of 5.5 sen per share.

Save for FY2020, the group has been loss-making in 14 of its 15 past financial years since FY2009. Its financial year was recently changed to March 31 for the financial period 2025. 

Sierac Corporate Advisers Sdn Bhd has been appointed as adviser to Focus Dynamics for the share capital reduction, which is expected to be completed in the first quarter of 2025.

Besides its F&B interests, Focus Dynamics operates its business activities through two other segments, namely manufacturing and engineering services.

Shares of Focus Dynamics closed half a sen or 25% higher to 2.5 sen on Wednesday, bringing the group a market capitalisation of RM159 million. The counter saw some 971,900 shares traded.