Top Glove proposes 2-for-1 bonus issue

THE world's largest glove manufacturer Top Glove Corp is looking to undertake a bonus issue on the basis of two bonus shares for every one existing share held.

The exercise will see up to 5.48 billion bonus shares issued to shareholders whose names appear in the company's record of depositors on an entitlement date to be determined.

Top Glove on Monday said the proposed bonus issue is meant to reward shareholders and allow them to have greater participation in the equity of the group in terms of the number of shares, while retaining their percentage of equity interest held.

Lim Wee Chai, executive chairman of Top Glove, said that adding and creating value for shareholders has always been a business priority.

"This will also enable us to increase the number of shares in issue, which is expected to create more liquidity and marketability for Top Glove shares," he added.

The board of directors is thus of the view that the proposed bonus issue is the most appropriate avenue to reward existing shareholders while also enhancing the company's capital base. 

The proposed two-for-one bonus issue is subject to shareholders' approval at an extraordinary general meeting to be convened.

For illustrative purposes, based on Top Glove shares' three-month volume-weighted average market price of RM13.38 up to July 6, the theoretical ex-bonus share price of the stock is about RM4.46.

Shares of Top Glove on the Malaysia bourse were trading at RM24.42 as at 12.29pm on Monday, up RM1.44 or 6.3 per cent.

Meanwhile on the Singapore Exchange, the dual-listed counter climbed S$0.76 or 10.1 per cent to trade at S$8.23 as at 2.09pm.

Top Glove said its balance sheet remains "robust", with a net cash position of RM284 million (S$92.7 million) and a shareholders' equity of RM4.7 billion as at May 31, 2020.

Its last bonus issue was completed in October 2018, when its share price had reached about RM11.50. The company has completed seven bonus issues and one share split since its listing in 2001.

Separately, the US Customs last week issued a detention order on Top Glove's disposable gloves, possibly over forced labour concerns.

The company's shares, along with other glove counters, saw "intriguing trading patterns" last week as well as exuberance tempered by worries over the US detention order.