KUALA LUMPUR (March 13): Borneo Oil Bhd has proposed a bonus issue of 2.11 billion shares on the basis of four bonus shares for every eight existing shares held and 528.09 million free warrants on the basis of one for eight.

The proposed bonus issue of shares will be implemented concurrently with the proposed bonus issue of warrants, said in a filing with Bursa Malaysia today.

The company said the proposed bonus issue of shares and warrants are the most appropriate avenue of rewarding the company’s existing shareholders as well as enhance the company's capital base.

“The proposed bonus issue of warrants is not expected to raise immediate funds for the company as the Warrants D will be issued at no cost to the entitled shareholders,” said Borneo Oil, adding that the exact time frame for utilisation of the proceeds is not determinable at this juncture.

For illustrative purpose, the company said that the gross proceeds that is expected to be raised upon full exercise of the Warrants D based on the indicative exercise price of 10 sen per Warrant D is approximately between RM37.86 million and RM52.81 million.

Borneo Oil said the gross proceeds to be raised from the exercise of the Warrants D will be utilised as additional working capital for the company and its subsidiaries.

“The proceeds may be utilised to finance, amongst others, repayment to trade creditors as well as general expenses such as travelling, staff training, rental of offices and utilities,” the company said.

“Pending utilisation of the proceeds to be raised from the exercise of the Warrants D for the above purposes, the proceeds will be placed in deposits with financial institutions or short-term money market instruments,” the company added.

Borneo Oil said the interest derived from the deposits with financial institutions or any gains arising from the short-term money market instruments will be used as additional working capital for the group.

Barring any unforeseen circumstances and subject to all required approvals being obtained, Borneo Oil said the proposals are expected to be completed by the second quarter of 2017.

Shares in Borneo Oil closed up half a sen or 3.03% at 17 sen, giving it a market capitalisation of RM514.9 million.