KUALA LUMPUR (June 6): Information and communication technology services group Omesti Bhd (KL:OMESTI) has announced a series of exercises aimed at settling part of its debt, raising funds, and reducing its accumulated losses.

They include share settlement exercises to part-settle debt owed to the group's 25.77%-owned associate Microlink Bhd (KL:MICROLN) and outstanding redeemable preference shares (RPS), as well as a RM62.12 million rights issue with free warrants, a RM45.65 million private placement and a RM200 million capital reduction exercise, according to the company’s bourse filing on Friday.

The debt settlement with Microlink involves Omesti issuing up to 85 million new shares to the listed associate at a minimum of 10 sen each.

As at June 5, Omesti owed Microlink RM30.03 million. Based on an indicative price of 10 sen per share, the debt settlement will offset RM8.5 million of the debt, trimming the outstanding debt owed to RM21.53 million.

Meanwhile, Omesti plans to settle RM106.44 million in RPS via the issuance of up to 1.06 billion new shares at a minimum issue price of 10 sen apiece.

The proposed RPS settlement is deemed a related-party transaction given major shareholder Datuk Mah Siew Kwok holds 19.49% of the RPS, while deputy chairman and substantial shareholder Datuk Seri Thong Kok Khee is deemed interested in 10.55% of the RPS via Insas Bhd (KL:INSAS)

Subsequently, Omesti plans to undertake a rights issue of up to 789.04 million shares on the basis of one new share for every one share held, and up to 315.61 warrants on the basis of two warrants for every five rights shares subscribed

Based on an indicative issue price of eight sen per share, the rights issue is envisioned to raise up to RM63.12 million in proceeds. Of the amount, RM40.51 million will be used to fund the group’s project, while the remainder will be for repayment of bank borrowings, working capital of its healthcare division, and defraying the exercises’ costs.

Next, Omesti will implement a private placement of up to 456.47 million new shares, or 15% of the enlarged share base following the conclusion of the prior exercises to third-party Bumiputera investors at a price to be determined later.

At an illustrative issue price of 10 sen per share, the private placement is expected to raise RM45.65 million. The proceeds will be used to repay the outstanding RM21.53 million in debt owed to Microlink, while the remainder will be used to fund working capital.

Lastly, Omesti plans to undertake a reduction of its issued share capital by RM200 million and use the corresponding credit against its accumulated losses.

Based on its accumulated losses as at end-March of RM286.72 million and including the estimated costs of the exercises, the group’s accumulated losses will be reduced to RM88.52 million.

All in all, assuming full exercise of all outstanding warrants and maximum scenarios of each proposed exercise, the exercises will enlarge Omesti’s share base to 3.5 billion shares from the current 540.67 million.

According to Omesti, it has not undertaken a cash call in the past 12 months.

Shares in Omesti ended half a sen or 4.55% lower at 10.5 sen, giving the company a market capitalisation of RM54.19 million. Microlink closed unchanged at 17.5 sen, valuing the company at RM182.71 million.