BIMB issuing 175.4m new shares to Tabung Haji

BIMB Holdings Bhd has proposed a restricted issue of 175.4 million new ordinary shares of RM1 each to Lembaga Tabung Haji (LTH) to raise RM175.4 million.
The shares, representing 16.44% of the enlarged issued and paid-up share capital, will be issued at RM1 each and used to fund a capital raising exercise by its 51% subsidiary Bank Islam Malaysia Bhd (Bank Islam).
In an announcement to Bursa Malaysia on April 6, BIMB said the proceeds from the restricted share issue will be utilised to subscribe part of to Bank Islam's proposed issuance of 540 million Islamic convertible redeemable non-cumulative preference shares of RM1 each (CRNCPS).
By virtue of BIMB’s 51% shareholding in Bank Islam, BIMB’s is entitled to 275.4 million units of CRNCPS. It plans to subscribe 175.4 million units with cash and the remaining 100 million units via RM100 million cash proceeds arising from the redemption of an existing subordinated Mudharabah financing facility granted by the company to Bank Islam, subject to Bank Negara Malaysia's (BNM) approval.
BIMB said Bank Islam has developed a strategic capital management plan involving a capital injection of up to RM540 million to enhance Bank Islam Group’s capital base and improve its risk-weighted capital ratio (RWCR).
"Bank Islam and its subsidiaries’ RWCR as at 31 December 2008 stood at 13.08%. The capital raising will strengthen its balance sheet during and beyond the current economic downturn. Provided the proposed CRNCPS obtains, amongst others, BNM's approval for qualification as Tier 1 capital, the RM540 million to be raised from the proposed CRNCPS will improve Bank Islam Group’s core capital ratio from 11.32% as at 31 December 2008 to 15.84% and RWCR to 17.26% after the completion of the proposed Bank Islam capital raising" said BIMB.
Currently, LTH holds 373.67 million BIMB shares, representing a 41.92% equity interest. LTH has indicated its intention to subscribe to the proposed restricted issue, which will lift its shareholding to 51.47% and trigger a mandatory general offer.
"LTH has no intention of undertaking a mandatory offer and is seeking an exemption from the obligation to extend a mandatory offer," said BIMB. — By Lee Cherng Wee
(The Malaysian Reserve, Apr 7, 2009, p2)