Cuscapi explains termination of agreements under fund-raising exercise

Cuscapi Bhd's first in-house developed interactive tablet, REV.

KUALA LUMPUR: Cuscapi Bhd’s decision to downsize its fund-raising exercise was due to concerns expressed by its largest potential investor, Ultimate Quality Success Sdn Bhd (UQS).

In a filing with Bursa Malaysia, the restaurant management and solutions provider said UQS, controlled by businessman Datuk Jayakumar Panneer Selvam, was concerned over the issuance of shares to the other three investors.

On Oct 10, Cuscapi entered into subscription agreements with UQS as well as three individuals - Ong Chin Hui, Tan Sri Koh Kin Lip and Datuk Dr Tan Kim - that would entail issuing 300 million new Cuscapi shares and 60 million new warrants.

The exercise was expected to raise gross proceeds of RM79.8mil, with the bulk (RM53.2mil) to come from UQS that would subscribe for 200 million shares and 40 million warrants.

On Tuesday this week, Cuscapi entered into deeds of termination with all the parties except UQS. The announcement then did not explain why the agreements were cancelled.

In the latest announcement, Cuscapi explained that it entered into subscription agreements with the four investors independently and these agreements were not inter-conditional to one another.

“Subsequently, UQS, being the largest investor, expressed concerns over the issuance of addition shares to the other three investors.

“After engagement with UQS, Cuscapi held discussions with the other three investors who agreed to mutually terminate their respective subscription agreements with Cuscapi,” the company said.

As a result, the total gross proceeds would be reduced from RM79.8mil to RM53.2mil and the utilisation of proceeds has been revised.

Instead of RM70.1mil, the amount to be spent for business expansion would be RM46.5mil, Cuscapi said. Working capital allocation, meanwhile, will be lowered to RM6mil from RM9mil earlier.

Cuscapi did not mention any change to its earlier notice that the fund-raising exercise would be completed in the fourth quarter of this year.

Based on Cuscapi’s current issued share capital of 482.92 million shares, UQS would end up with 29.3% of the company’s enlarged share capital prior to exercising its 40 million warrants (assuming the outstanding employee share option scheme options are not exercised into new Cuscapi shares).