KUALA LUMPUR (Dec 24): Loss-making Parlo Bhd (KL:PARLO) has proposed a cash call and capital reduction to revive its financials.

The ACE Market-listed travel and tour services provider announced in a filing with Bursa Malaysia it intends to undertake a rights issue of 300.58 million shares that comes with free detachable warrants to raise fresh capital after capital reduction.

The rights issue will be conducted on a renounceable basis of one rights share for every one consolidated share, with one Warrant B for every four rights shares subscribed. The issue price for the rights shares will be determined later.

Assuming an issue price of 10 sen per rights share, the exercise is expected to raise gross proceeds of up to RM30.06 million, with 74.85% allocated to the travel and tours business segment and 21.82% for general working capital.

Prior to the rights issue, the company will undertake a capital reduction of RM42 million and share consolidation. At the group level, Parlo’s accumulated losses stood at RM28.64 million as at end-September. Upon completion of the proposed share capital reduction, the group is expected to retain earnings of RM12.36 million.

Parlo has also proposed a three-to-one share consolidation. Based on the closing price of its shares at 4.5 sen on Dec 9, the theoretical price post-consolidation could adjust to 13.5 sen. Following the consolidation, Parlo’s share base will be reduced to 200.38 million shares.

Parlo said these proposals are targeted for completion by the third quarter of 2025.

For the nine months ended Sept 30, 2024, Parlo reported a net loss of RM6.64 million, primarily due to an unrealised loss on investments by its subsidiary, on revenue of RM60.4 million.

Parlo’s share price, which has fallen more than 58% year-to-date, closed unchanged at five sen on Tuesday, giving the group a market capitalisation of RM30.1 million.

Looking ahead, Parlo aims to expand its travel and tour segment, as demand within industry is expected to rebound with the easing of global travel restrictions.

Parlo has been loss-making since 2018, mainly due to stiff competition, challenges within the travel and tours industry, and the unprecedented disruption to tourism caused by the Covid-19 pandemic.