KUALA LUMPUR (Jan 17): Adventa Bhd has proposed to undertake a three-for-five rights issue together with free warrants on the basis of one warrant for every two rights shares subscribed, raising RM50.42 million for its future business expansion.

The medical devices manufacturer said in a filing with Bursa Malaysia today that under the proposed exercise, it will issue 91.67 million new rights shares at 55 sen apiece.

Adventa said the issue price is at a discount of 9.84% to the theoretical ex-rights price (TERP) of 61 sen based on the volume-weighted average market price (VWAMP) of Adventa shares for the five-day period ended Jan 12, 2018 of 65 sen.

The company also expects to issue some 45.84 million free warrants with a five-year tenure, each convertible to one Adventa share at an exercise price of 65 sen per warrant.

The exercise price is at a 6.56% premium to Adventa shares' TERP price of 61 sen, but the company said it took into consideration the earnings potential of Adventa Group.

From the RM50.42 million expected to be raised from the rights issue, Adventa plans to use RM30 million for the business expansion — which it has yet to identify — with another RM19.42 million for working capital and the balance for the expenses related to the proposal.

Meanwhile, Adventa will also apply to procure irrevocable undertaking from its managing director Low Chin Guan to fully subscribe his rights issue entitlement, and to exempt Low from undertaking the mandatory takeover offer in Adventa after the right issue.

This is because post-rights issue, Low's shareholding will increase by over 2%, which will trigger the mandatory takeover obligation otherwise, said Adventa.

As at Jan 12, Low, together with persons acting in concert, held 66.41 million Adventa shares representing 43.46% stake in the company.

At 5pm, shares of Adventa lost one sen or 1.59% to close at 62 sen, with 11,000 shares traded, giving it a market capitalisation of RM94.7 million.