KUALA LUMPUR (July 26): Practice Note 17 (PN17) company Alam Maritim Resources Bhd (KL:ALAM) has announced its regularisation plan, which includes a share capital reduction of RM440 million, 10-to-one share consolidation, an issuance of renounceable rights shares with warrants and a scheme of arrangement with its creditors.

In a filing with Bursa Malaysia on Friday, the integrated marine oil and gas services company said the credit arising from the share capital reduction will be used to set off the company's accumulated losses amounting to RM489.81 million as at March 31, 2024.

Alam Maritim is also proposing to consolidate every 10 shares into one share. The company, with an issued share capital of 1.53 billion shares as at June 30, 2024, will see this reduced to 153.18 million shares after the proposed reduction.

Alam Maritim also plans to undertake a renounceable rights issue on the basis of three rights shares for every four consolidated shares held on an entitlement date to be determined later at an issue price of 12 sen. The issue price represents a discount of 56.9% of Alam Maritim shares of 27.83 sen as at July 25, 2024.

The rights issue will also come with warrants on the basis of one warrant for every four rights shares subscribed at an exercise price of 30 sen per warrant.

Proceeds from the rights issue with warrants of RM13.79 million will go towards the rights issue cash settlement, which forms part of its debt restructuring.

Alam Maritim's group managing director and group CEO and major shareholder Datuk Azmi Ahmad and indirect major shareholder Datuk Aloysius Albert Michael have undertaken to subscribe in full their entitlement of rights shares and any additional rights shares that are not taken up by shareholders of up to a maximum of 55 million rights shares and 59.89 million rights shares, respectively.

Meanwhile, the proposed debt settlement entails the issuance of 177.51 million settlement shares at an issue price of 27.83 sen each, with 44.38 million free settlement warrants to the scheme creditors on the basis of one settlement warrant for every four settlement shares. The amount to be settled via the settlement shares to the scheme creditors is RM49.4 million.

Upon completion of the proposed debt restructuring, Alam Maritim is expected to recognise a one-off net gain of RM50.63 million as a result of the waiver of debts owed to the scheme creditors.

The group has recorded consecutive net losses of between RM80.28 million and RM226.73 million from the financial year ended Dec 31, 2018 to the 18-month financial period ended June 30, 2022, before turning profitable again in FY2023 with a net profit of RM14.19 million.

It expects to complete the proposed regularisation plan within 12 months from the date of approval by Bursa Securities. Inter-Pacific Securities Sdn Bhd is the principal adviser for the proposed regularisation plan.

Alam Maritim slipped into PN17 status after its external auditor Baker Tilly Monteiro Heng PLT expressed a disclaimer of opinion in the group's audited accounts for the financial period from Jan 1, 2021 to June 30, 2022 in October 2022.

Shares in Alam Maritim closed up 0.5 sen or 14.29% to four sen on Friday, giving the group a market capitalisation of RM61.27 million. Its share price has risen 33.33% so far this year.

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