KUALA LUMPUR (March 20): Iskandar Waterfront City Bhd (KL:IWCITY) has proposed a regularisation plan involving the issuance of new shares to settle outstanding debts, a private placement and a capital reduction in order to exit its affected listed issuer status.

In a bourse filing, the property developer said it had entered into a conditional settlement agreement with Rampai Fokus Sdn Bhd (RFSB) — an indirect wholly-owned unit of its major shareholder, Iskandar Waterfront Holding Sdn Bhd — to convert the amount it owed to RFSB into IWCity shares.

RFSB is a wholly-owned subsidiary of Danga Bay Sdn Bhd, which is in turn a unit of Iskandar Waterfront Holding.

Under the agreement, according to its filing with Bursa Malaysia, IWCity — which is controlled by tycoon Tan Sri Lim Kang Hoo — will issue up to 725.4 million new shares at 37 sen per share to fully settle outstanding advances of RM268.4 million, including accrued interest, provided by RFSB to IWCity and its subsidiaries as of Feb 28, 2025.

Upon completion of the new share issuance, RFSB will emerge as IWCity’s largest shareholder with a 41.72% stake in the enlarged issued share capital. The collective shareholding of RFSB and persons acting in concert (PACs) will increase from 37.04% to 61.34%.

RFSB intends to seek an exemption from making a mandatory takeover offer, IWCity said in the filing.

Kang Hoo's family vehicle Credence Resources Sdn Bhd is the largest shareholder in Iskandar Waterfront Holding with a 63.13% stake, while the Johor state owns a 36.87% stake.

Kang Hoo has 90% shareholding in Credence Resources, with Ekovest managing director Tan Sri Lim Keng Cheng holding 5% and executive director Datuk Lim Hoe holding the remaining 5%.

Additionally, IWCity plans to issue up to 92.11 million new shares, representing 10% of the company’s issued shares, to independent third-party investors. Based on an illustrative price of 37 sen per share, the private placement could raise up to RM34.1 million.

Of the proceeds raised, RM28 million will be allocated for payments to contractors, professionals and property-related fees, while the remainder will be set aside for working capital and expenses related to the regularisation plan.

As for the capital reduction exercise, IWCity plans to cancel RM120 million of its RM766.88 million share capital to offset the group’s RM47.34 million in accumulated losses as of end-December 2024.

This would leave the company with retained earnings of RM69.66 million, which will be utilised as determined by the board at a later date.

"The board is of the view that the successful implementation of the proposed regularisation plan will enable the group to regain profitability and strengthen its financial position, thereby comprehensively addressing its affected listed issuer status," IWCity said.

It added that these measures would enhance the group’s capital structure, support its core business and resolve its financial challenges.

Barring any unforeseen circumstances, IWCity expects the proposed regularisation plan to be completed within six months after receiving the stock exchange's approval.

IWCity fell 0.5 sen to close at 38.5 sen on Thursday, giving the company a market capitalisation of RM354.6 million.