This article first appeared in The Edge Malaysia Weekly on October 27, 2025 - November 2, 2025

Berjaya Corp Bhd (KL:BJCORP) recently unveiled a proposal for a bonus issue of warrants, providing shareholders with 33 new warrants for every 100 shares held. While the exercise price remains undetermined, BCorp’s illustrative price of 32 sen — representing a 10.92% premium to the group’s five-day volume-weighted average price of 28.85 sen — provides a useful framework to assess potential implications. If fully exercised at this level, the warrants would raise gross proceeds of about RM704.27 million, earmarked primarily for working capital, although this would be over the five-year tenure of the warrants.

The move clearly constitutes a strategic cash call. Shareholders, including controlling tycoon Tan Sri Vincent Tan, who holds a direct stake of 9.64% and an indirect stake of 10.83% in the company, would need to allocate significant funds to participate fully. Tan alone faces an estimated outlay of RM126.02 million.

Unlike a rights issue, which demands immediate capital commitment, the five-year tenure of the warrants provides flexibility. Shareholders can stagger their exercise of the warrants, easing short-term cash flow pressure. This feature makes the bonus warrant a more gradual form of equity financing; however, there are risks that shareholders with financial muscle who convert warrants sooner than others will help tighten their grip on the company and have more voting shares.

Yet, the warrants carry trade-offs. Shareholders who opt not to exercise their warrants risk dilution of voting power and potential reduction in influence in corporate decisions. Conversely, those who participate are able to maintain or increase their stakes, but at the cost of committing capital over an extended period.

Strategically, the issuance signals BCorp’s intention to secure long-term funding while offering shareholders the flexibility to invest on their own terms. However, the ultimate success hinges on appetite for participation and market perception. BCorp’s share price has fallen about 6% this year, closing at 29.5 sen last Friday — slightly below the illustrative exercise price. Unless its share price performance improves, warrant holders will not be inclined to convert their warrants into shares.

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