RHYTHM Consolidated Bhd plans to raise about RM76mil through its recently approved irredeemable convertible unsecured loans exercise (Iculs) scheduled for completion in October.
Group managing director Teoh June Chake told StarBiz that RM45mil from the proceeds would be used to repay bank borrowings.
“We intend to reduce the group’s gearing ratio from the current 1.3 times to less than 0.2. The remaining sum would be used as working capital to further strengthen our existing core business,” he said, adding that the completion of the exercise would better place the group to tap opportunities provided by the Asean Free Trade Area and World Trade Organisation.
Teoh said the price of the Iculs, fixed at RM1 in April 2003, was attractive as it was determined when Rhythm shares were traded below RM1.
“Shareholders with two existing shares will be entitled to purchase three Iculs. They will also receive one free detachable warrant. Iculs subscribers will receive a 5% coupon rate for five years,” he said, adding that shareholders could tender an Icul for conversion into an ordinary share with no additional charges anytime during the five-year period.
According to Teoh, Rhythm’s core business is now focused on four core activities.
“These include manufacturing and trading of paper-related products, which has been our traditional business before listing in 1998. The other segments include publishing and printing of school texts, franchising outlets on books and stationery, and providing smart-card services and infrastructure. We are currently tendering for several contracts from the Education Ministry to publish and print secondary school text books,” he said.
Teoh said the group had in January published and printed over one million textbooks for secondary schools nationwide.
“Since 1998, Rhythm has expanded its franchise outlets business by creating a stronger distribution network. With such networking in place, we are now better placed to penetrate into schools and kindergartens,” he said.
The group’s foray into smart card services and infrastructure business in 2000 had recently borne fruits, Teoh added.