Announcement

Date: 11 January 2008

Submitting Merchant Bank
:
RHB INVESTMENT BANK BERHAD  
Company Name
:
RCE CAPITAL BERHAD
Stock Name
:
RCECAP  
Date Announced
:
11/01/2008  


Type
:
Announcement
Subject
:
RCE CAPITAL BERHAD ("RCE" or the "Company")

Proposed private placement of up to 64,633,700 new ordinary shares of RM0.10 each in RCE ("RCE Shares" or "Shares"), representing approximately up to 10% of the existing issued and paid-up share capital of RCE ("Proposed Placement")


Contents
:
The following announcement is released for and on behalf of RCE Capital Berhad.



Announcement Details :

  1. INTRODUCTION
  2. The Board of Directors of RCE ("Board") wishes to announce that the Company proposes to undertake a private placement of up to 64,633,700 new RCE Shares, representing approximately up to 10% of the existing issued and paid-up share capital of the Company.

  3. DETAILS OF THE PROPOSED PLACEMENT
  4. The size of the Proposed Placement will be up to 64,633,700 new RCE Shares, representing approximately up to 10% of the existing issued and paid-up share capital of RCE ("Placement Shares").

    The Placement Shares will be placed out by RHB Investment Bank Berhad ("RHB Investment Bank"), acting as the Placement Agent, to investor(s) to be identified by the Company in accordance with the Policies and Guidelines on Issue/Offer of Securities issued by the Securities Commission ("SC") ("SC Guidelines").

    The issue price of the Placement Shares shall be determined by the Board at a later date following the receipt of all the relevant approvals for the Proposed Placement ("Price Fixing Date"). The issue price of the Placement Shares shall be determined in the following manner:

    1. based on the weighted average market price of the RCE Shares for the 5 market days immediately prior to the Price Fixing Date, with a discount of not more than 10% if deemed appropriate; or
    2. the par value of the RCE Shares of RM0.10 each; whichever is higher.
    3. The Placement Shares shall upon allotment and issue, rank pari passu in all respects with the then existing RCE Shares in issue except that they shall not be entitled to any dividends, rights, allotments or other distributions for which the entitlement date precedes the date of allotment of the Placement Shares.

  5. RATIONALE FOR THE PROPOSED PLACEMENT AND UTILISATION OF PROCEEDS
  6. The Proposed Placement will enable RCE to raise additional working capital expeditiously for the business of RCE and its subsidiaries ("RCE Group").

    The exact quantum of gross proceeds to be raised from the Proposed Placement would depend on the actual issue price and the number of Placement Shares issued.

    For illustrative purposes only, assuming the Placement Shares are issued at RM0.79 per Placement Share, which represents a discount of approximately 10% from the weighted average market price of the Shares for the 5 market days to 8 January 2008 (being the latest practicable date prior to the date of this announcement) of approximately RM0.88 per Placement Share, the gross proceeds to be raised pursuant to the Proposed Placement will be up to approximately RM51.06 million.

  7. EFFECTS OF THE PROPOSED PLACEMENT
  8. 4.1 Share Capital

    The proforma effects of the Proposed Placement on the issued and paid-up share capital of RCE are set out in Table 1 below.

    4.2 Net Assets ("NA") and Gearing

    For illustrative purpose only, based on the latest audited consolidated financial results of RCE as at 31 March 2007, the proforma effects of the Proposed Placement on the consolidated NA per RCE Share and gearing, assuming the Placement Shares are issued at RM0.79 per Placement Share and the Proposed Placement had been effected on that date, are set out in Table 2 below.

    4.3 Earnings

    The Proposed Placement is not expected to have any material effect on the earnings of RCE Group for the financial year ending 31 March 2008 as the Proposed Placement is only expected to be completed in the first quarter of year 2008. Nonetheless, the Proposed Placement is expected to contribute positively to the future earnings of RCE Group.

    4.4    Dividends

    The Board paid dividends amounting to 10% less income tax of 26% for the financial year ended 31 March 2007. Any dividends to be declared by RCE in the future would depend on, inter-alia, the profitability and cashflow position of the RCE Group.

    4.5    Shareholdings of Substantial Shareholders

    Based on the Register of Substantial Shareholders as at 8 January 2008, the proforma effects of the Proposed Placement on the shareholdings of the substantial shareholders of RCE (holding 5% or more of RCE Shares) are illustrated in Table 3 below.

  9. APPROVALS REQUIRED FOR THE PROPOSED PLACEMENT
  10. The Proposed Placement is subject to the following approvals being obtained:

    1. the SC pursuant to the SC Guidelines;
    2. the SC pursuant to the Guidelines on the Acquisition of Interests, Mergers and Take-overs by Local and Foreign Interests issued by the Foreign Investment Committee;
    3. Bursa Malaysia Securities Berhad for the listing of and quotation for the Placement Shares; and
    4. other relevant authorities, if any.
    5. At the Company's last Annual General Meeting ("AGM") held on 13 September 2007, shareholders of RCE passed a resolution that empowers the Board from time to time to issue new RCE Shares subject to the approvals of the relevant authorities, upon such terms and conditions and for such purposes as the Board deems fit, provided that the aggregate number of new RCE Shares to be issued shall not exceed 10% of the total issued and paid-up share capital of RCE at the time of the issue, pursuant to Section 132D of the Companies Act, 1965 ("Act"). Such authorisation shall continue to be in force until the conclusion of the next AGM of the Company, prior to which the Proposed Placement is expected to be completed.

  11. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS
  12. None of the Directors, major shareholders of RCE and persons connected to them have any interest, direct or indirect, in the Proposed Placement as the Placement Shares will not be placed to them.

  13. DIRECTORS' STATEMENT
  14. The Board is of the opinion that the Proposed Placement is in the best interest of the Company.

  15. OTHER MATTERS
  16. The Company has appointed RHB Investment Bank as the Adviser and Placement Agent for the Proposed Placement.

    Barring any unforeseen circumstances, the relevant applications to the authorities in relation to the Proposed Placement will be made within 3 months from the date of this announcement.

    To the best of the knowledge of the Board, the Proposed Placement does not depart from the SC Guidelines.

    This announcement is dated 11 January 2008.

 


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ATTACHMENT

- Tables.doc

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