Its share price closed at 29 sen on Monday with a market capitalisation of RM154 million. By the close of trade today, it had fallen another 2 sen or 12.9% to 13.5 sen, valuing the company at just RM72 million. In just three days, the shares had tanked 53.4%.
The plunge comes despite the group announcing its regularisation plan to Bursa Malaysia on March 13 after falling into the PN17 category for financially distressed companies last year.
EATech is primarily involved in ship owning and operating marine vessels for the transportation and offshore storage of oil and gas.
The regularisation plan proposes a consolidation of every 15 ordinary shares into one consolidated share. Following the consolidation, there will be 35.37 million shares.
Additionally, the group has proposed an issuance of up to 53 million new EATech shares, which represents around 60% of the enlarged total number of issued shares after the issuance.
At the latest practicable date (LPD), EATech’s issued share capital comprises 530.5 million shares worth RM179.76 million.
White knight to the rescue?
Concurrently on Monday, EATech entered into subscription agreements with Eco Offshore Services Sdn Bhd (EOSSB), Abdul Halim Ali and Khiruddin Ibrahim Said to subscribe for 53.05 million shares post-consolidation at RM1.131 per share.
EOSSB is the investment vehicle of Abdul Rashid Abdul Manaf, co-founder of Eco World Development Group Bhd. He is currently a non-independent, non-executive director of the property developer.
The issuance is expected to raise around RM60 million.
EOSSB will subscribe to 46.86 million shares for RM53 million, which will give it a 53% stake in EATech’s consolidated share capital. Halim and Khiruddin will each subscribe to 3.09 million of the issued shares, translating to a 3.5% stake.
Upon completion of the issuance, Rashid will emerge as an indirect controlling shareholder of EATech via EOSSB.
Following this, Rashid will extend a mandatory general offer (MGO) to acquire the rest of the shares in EATech he does not own, pursuant to Section 218(2) of the Capital Market Services Act 2007.
However, it was clarified that Rashid intends to maintain the listing status of EATech upon completion of the MGO.
In the filing, it was indicated both Sindora Bhd and Kulim (Malaysia) Bhd, who collectively will hold a total of approximately 52.48% of the total issued shares as at LPD, would not accept the MGO.
Halim and Khiruddin had also provided Rashid and EOSSB with undertakings not to accept the MGO.
“EATech, being a PN17 entity, had also not been successful in obtaining additional funding from financial institutions,” the group said.
The board pins high hopes on Rashid’s emergence as a controlling shareholder, optimistic that it would “provide EATech with newfound strategic direction”.
EATech had triggered various PN17 criteria, first announced by the board on Feb 25, 2022.
Firstly, the shareholders’ equity of the company on a consolidated basis at RM17.5 million was less than 25% of its share capital of RM179.8 million.
The group’s auditors had also expressed concern about the company’s ability to continue after reporting dismal net losses for the financial year ended Dec 31, 2020.
Utilisation of proceeds
The company has earmarked RM32 million from the RM60 million raised for the repayment scheme to their creditors, pursuant to a scheme of arrangement (SOA) undertaken by the company on Dec 5, 2022.
The SOA entails that EATech undertake an asset disposal programme of five vessels, to raise RM46 million after netting the necessary expenditures, in addition to the fund-raising exercise.
Total debts owing to the scheme creditors following a proof of debt exercise amounted to approximately RM257.1 million.
“The proposed estimated return to the scheme creditors represents approximately 30% of the Adjudicated Debt. For illustration purposes, this amounts to approximately RM77.1 million,” said EATech.
From the proposed issuance, EATech will utilise RM26 million for repayment to Sindora.
The group owes them RM41.3 million in total, and the balance debt of RM15.3 million shall be settled over a three-year term via internally generated funds.
The remaining RM2 million from the proposed issuance are to defray expenses.