KUALA LUMPUR (June 26): Sarawak Consolidated Industries Bhd (KL:SCIB) has proposed a rights issue to raise up to RM53.45 million, and a share capital reduction to offset RM110 million in accumulated losses.

The rights shares will be offered at seven sen each, on the basis of one new share together with one warrant for every one existing share held, the group said in a bourse fuiling.

It involves a maximum of 763.62 million rights shares and a similar number of warrants. SCIB executive chairman and major shareholder Datuk Chong Loong Men has committed to subscribing to 143 million rights shares, amounting to RM10 million, the group said.

Chong recently emerged as a substantial shareholder in SCIB, holding a 5.8% stake after acquiring 40.5 million shares from businessman Keh Chuan Seng via an off-market transaction on June 11. The shares were transacted at 28 sen apiece, totalling RM11.35 million, representing a steep premium of over 51% compared to SCIB’s last traded price of 18.5 sen on June 11.

SCIB said the proceeds of the rights issue will be used to fund the construction of a new factory, acquire factory machinery and repay bank borrowings.

As for the RM110 million share capital reduction, SCIB said this will allow the group to rationalise its financial position by reducing its accumulated losses via the cancellation part of its issued share capital which is lost or unrepresented by available assets.

The group recorded accumulated losses of RM76.97 million for the financial year ended March 31, 2025 (FY2025). Following the capital reduction, the group will have retained earnings of RM33.03 million.

Chong said in Thursday's filing that the rights issue offers shareholders a direct opportunity to participate in SCIB’s growth trajectory while reinforcing its capital base, while the capital reduction reflects the group’s commitment to enhancing transparency and restoring balance sheet strength.

“We are laying a solid foundation for long-term growth and operational scalability, especially as we align ourselves with Sarawak’s robust infrastructure agenda and the broader regional market. These corporate initiatives will enhance our financial agility and create sustainable value for all stakeholders,” he said.

At Thursday’s close, SCIB shares were down 0.5 sen or 3.2% at 15 sen, valuing the group at RM105 million. Year to date, the stock has fallen 36.2%.