A blow for Scomi’s minorities
FocusM | 17 Aug 2018 00:30
Minority shareholders of once high-flying Scomi Group Bhd must have been surprised when the company announced a RM440 mil capital reduction exercise to erase its massive accumulated losses.
This latest move by the company comes in the wake of falling fortunes in the last few years. Investors who bought the shares during Scomi’s listing in 2003 had paid RM1.38 apiece.
A capital reduction is the process of decreasing a company’s shareholder equity through share cancellations and share repurchases.
The counter was trading at its historical low of eight sen on Aug 15. On a 52-week basis, it has plunged by 77.8% from a high of 36 sen. Also hit are investors who took up a private placement of shares in June at an indicative price of 12 sen per share.
Minority shareholders must be asking if Scomi has exhausted all possible options to resolve its issues. Couldn’t the company have taken a different route to address its financial woes, including further cost-cutting or capital injection via new shareholders?
Download and read the latest issue of Focus Malaysia here: