KUALA LUMPUR (Dec 31): Permaju Industries Bhd (KL:PERMAJU), which distributes motor vehicles under the Volkswagen and Ford franchises, as well as involved in property development and tree plantation, has proposed a share capital reduction to eliminate up to RM258 million of its accumulated losses.

“The reduction of accumulated losses is expected to enhance the credibility of the company and the group with the bankers, customers, suppliers, investors, and other stakeholders,” Permaju said in a filing on Tuesday.

The corresponding credit of up to RM258 million arising from the cancellation of its issued share capital will be used to offset against its accumulated losses, which stood at RM263.23 million at the end of its latest quarter ended Sept 30, 2024, leaving a retained net loss of RM5.35 million.

As of Dec 10, Permaju has an issued a share capital of RM446.51 million, comprising 1.96 billion ordinary shares. The company also has 739.33 million outstanding irredeemable convertible preference shares (ICPS) and 93.54 million outstanding warrants.

The company, which has been loss-making for the past four financial years, reported a net loss of RM18.19 million in FY2023, down from RM34.45 million in the previous year.

For the three months ended Sept 30, 2024, Permaju posted a net loss of RM6.52 million, versus a net profit of RM1.54 million in the same period last year, mainly due to lower sales of Ford vehicles, higher plantation expenditure, and impairment of receivables. Revenue dropped 43.5% to RM5.81 million, from RM10.29 million. The group has changed its financial year end from June 30 to Sept 30.

The latest proposed share capital reduction, subject to shareholders’ approval at an upcoming annual general meeting (AGM), is expected to be completed in the second quarter of 2025. SCA has been appointed as the principal adviser for the proposed exercise.

At noon break on Tuesday, Permaju’s share price was down half a sen or 11.11% at four sen, giving the company a market capitalisation of RM78.23 million.