IGB CORPORATION BERHAD PART A STATEMENT in relation to ...

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IGB CORPORATION BERHAD (5745-A)STATEMENT IN RELATION TO PROPOSED RENEWAL OF SHARE BUY-BACK AUTHORITY1. INTRODUCTIONOn 26 May 2005, the shareholders of the Company had at the 41 st AGM approved the resolutionpertaining to the share buy-back authority granted to the Company. This authority from shareholdersshall, in accordance with the Listing Requirements, expire at the conclusion of the forthcoming 42 ndAGM of the Company which will be held on 31 May 2006.On 6 April 2006, the Board of the Company announced the Company’s intention to seek theshareholders’ approval for the Proposed Renewal of Share Buy-Back Authority.The authority from shareholders, if renewed, shall be effective upon the passing of the ordinaryresolution for the Proposed Renewal of Share Buy-Back Authority, and will remain in effect until theconclusion of the next AGM of the Company, or until the expiry of the period within which the next AGMis required by law to be held, unless earlier revoked or varied by an ordinary resolution of theshareholders of the Company in general meeting.2. RATIONALE AND BENEFITSThe Proposed Renewal of Share Buy-Back Authority would enable IGB Group to utilise its surplusfinancial resources to purchase the Shares of the Company from the market. It may stabilise the supplyand demand of IGB Shares traded on the Main Board of Bursa Securities and thereby support itsfundamental value.Treasury Shares will give the Directors the option to sell at a higher price on Bursa Securities andrealize a potential gain without affecting the total issued and paid-up share capital of the Company. TheTreasury Shares may also be distributed to shareholders as dividends and, if undertaken, would serveto reward the shareholders of the Company.3. FUNDINGThe Board proposes to allocate an amount wholly out of retained profits and/or share premium accountof the Company for the purchase of its own Shares.The audited retained earnings of the Company as at 31 December 2005 were approximately RM1,198.1million whilst the audited share premium account of the Company as at 31 December 2005 wasapproximately RM383.5 million.The share buy-back if implemented, will be funded by internally generated funds of the Group and/orexternal borrowings.The amount of internally generated funds and/or external borrowings to be utilised will only bedetermined later depending on the available internally generated funds, actual number of IGB Shares tobe purchased and other factors.In the event the Company purchases and holds its own Shares using external borrowings, the Boardwould ensure the Company has sufficient funds to repay the external borrowings and the repayment willhave no material effect on the cashflow of the Group.4. RISK ASSESSMENTThe Proposed Renewal of Share Buy-Back Authority is not expected to have any potential materialdisadvantages to the Group and shareholders of IGB.Page 2
However, the share buy-back if implemented, would reduce the financial resources of the Group. Thismay result in the Group having to forgo any good investment opportunities that may emerge in thefuture and/or any income that may be derived from the funds utilised for implementation of the sharebuy-back.On the other hand, the financial resources of the Group may increase pursuant to the resale of theTreasury Shares at prices higher than the purchase price.In this connection, the Board will be mindful of the interests of the Group and shareholders of IGB inimplementing the share buy-back and/or any subsequent resale.5. EFFECTS OF SHARE BUY-BACKAssuming that the share buy-back is implemented in full, the proforma effects of the share buy-backwould be as follows:(a) Share CapitalBased on the assumption that all the Purchased Shares (including the existing 15,969,100 TreasuryShares) are subsequently cancelled, the issued and paid-up share capital of IGB would be reducedas follows:RMIssued and paid-up ordinary share capital as at 18 April 2006(Including Treasury Shares)Cancellation of Purchased Sharespursuant to the share buy-back730,834,576(73,083,457.60)Resultant issued and paid-up ordinary share capital 657,751,118.40(b) NAThere would be no effect on the issued and paid-up share capital of IGB if the Purchased Sharespursuant to the share buy-back were retained as Treasury Shares.The effects of the share buy-back on the NA per Share of the Group are dependent on the purchaseprices of IGB Shares and the effective funding cost or loss in interest income to the Group.The share buy-back will reduce the NA per Share when the purchase price exceeds the NA perShare at the relevant point in time. On the contrary, the NA per Share will be increased when thepurchase price is less than the NA per Share at the relevant point in time.(c) Working CapitalThe share buy-back is likely to reduce the funds available for working capital purposes of IGBGroup, the quantum of which depends on the actual purchase price and number of PurchasedShares.(d) EPSThe effects of the share buy-back on the EPS of the Group are dependent on the purchase prices ofIGB Shares and the effective funding cost or opportunity loss in interest income to the Group.Page 3
Page 1: THIS STATEMENT/CIRCULAR IS IMPORTAN
Page 5: PART ASTATEMENTin relation toPROPOS
Page 9 and 10: PART BCIRCULAR TO SHAREHOLDERSin re
Page 11 and 12: (a)(b)the transactions are in the o
Page 13 and 14: Nature ofTransactionsTransactingPar
Page 15 and 16: Explanatory notes:1The estimated va
Page 17 and 18: (i) the type of Recurrent RPTs tran
Page 19 and 20: 6.0. FURTHER INFORMATIONShareholder
Page 21 and 22: (b)(c)as RM2,630,000.00 has already
Page 23: EXTRACT OF ORDINARY RESOLUTIONSORDI

IGB CORPORATION BERHAD PART A STATEMENT in relation to ...

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