KUALA LUMPUR: Velesto Energy Bhd
has proposed a capital reduction exercise, reducing RM1.20bil from its issued share capital pursuant to Section 116 of the Companies Act 2016.
In a statement, Velesto said the corresponding credit of RM1.20bil would be credited to the retained earnings of the company or utilised to set-off against any accumulated losses of the company, if any.
This move aims to strengthen Velesto’s capital structure and prepare for future shareholder returns.
The proposed capital reduction will not result in any cash outflow, changes to shareholding, or dilution of ownership. Additionally, it will not affect the group’s net asset value.
Upon completion of the capital reduction, Velesto’s retained earnings are expected to be approximately RM1.33bil at the company level and RM1.06bil at the group level, based on the unaudited financial results as of Dec 31, 2024.
“This exercise marks an important step in creating long-term value for shareholders. We previously undertook a similar capital reduction exercise in 2020, and since then, we have made notable
progress in our financial recovery, recording profits in both financial years ended Dec 31, 2023 and 2024,” president Megat Zariman Abdul Rahim said in a statement.
“We believe it is ultimately about building strength and setting a solid foundation for the next phase and future distribution to shareholders. It optimises our balance sheet, puts us in a stronger capital position, and even opens the door to return free cashflow to our shareholders.”
The exercise is subject to approval from shareholders and sanction by the High Court of Malaya. Barring unforeseen circumstances, it is expected to be completed by the third quarter of 2025.
