KUALA LUMPUR (Aug 21): REDtone Digital Bhd (KL:REDTONE) has proposed a bonus issue of up to 386.48 million warrants, on the basis of one warrant for every two shares held by shareholders.

The exercise will not raise any immediate funds, as the warrants will be issued at no cost to entitled shareholders, but the amount of proceeds to be raised would depend on the actual number of warrants exercised during the exercise period.

The exercise price of the warrants and the entitlement date are to be determined later, the company said in a bourse filing on Thursday.

However, assuming an illustrative exercise price of 60 sen per warrant, the full exercise of the 386.48 million warrants is expected to raise RM231.89 million in proceeds to fund working capital.

AmInvestment Bank Bhd has been appointed as the principal adviser for the bonus issue, which is expected to be completed by the first quarter of 2026.

For the fourth quarter ended June 30, 2025 (4QFY2025), REDtone fell into the red with a net loss of RM7.58 million versus a net profit of RM29.5 million in 4QFY2024, attributed mainly to impairment of contract assets.

The impairment is related to the Malaysian Communications and Multimedia Commission’s (MCMC) rejection of REDtone’s claim on certain works performed for the Time 3 Extension under the Universal Service Provision Programme administered by the MCMC. 

Following the rejection, REDtone said the MCMC advised the company to enter into commercial agreements with telecommunications operators for the said work performed. The rejected claims were previously accounted for as contract assets.

“In view of the above, and considering the response from MCMC, the management, on prudence ground, has decided to make an impairment provision in the current quarter, in order to reflect the cost recoverability issue faced by the group pending further advise and support from MCMC and ongoing negotiations with the telcos,” it added.

The company declared an interim dividend of two sen per share, payable on Oct 16.

For the full year ended June 30, 2025 (FY2025), REDtone's net profit fell 56% to RM26.33 million from RM59.81 million in FY2024, as cumulative revenue slipped 5.1% to RM324.63 million from RM342.17 million a year ago.

Shares in REDtone ended one sen or 2% lower at 49 sen on Thursday, valuing the company at RM383.4 million.