Business

Wednesday March 11, 2009

Cost-effective measures to raise funds


UNDER the stimulus package, the Securities Commission (SC) will implement additional measures to reduce time-to-market to enable companies to raise funds in a more efficient and cost-effective manner.

Public-listed companies will no longer need approval from the SC to undertake rights issues while convertible and exchangeable bonds will be exempted from mandatory rating requirements.

Issuance and offerings of equity securities by unlisted public companies will also be exempted from seeking SC’s approval.

The Code on Take-Overs and Mergers 1998 will no longer apply to private limited companies in order to facilitate companies to undertake restructuring as well as take-overs and mergers.

The SC only needs to be informed of any amendments to the terms and conditions of bonds and sukuk issuances, which have already been approved by the bonds and sukuk holders. It also applies to any revisions relating to the terms and conditions of bonds and sukuk for listing on Bursa Malaysia.

OSK Research associate director Chris Eng said the SC measures only affected rights, sukuk and bonds issuance.

“We expect no major impact from this liberalisation. We believe only companies that have absolutely no choice will undertake a funds-raising exercise at this moment given the poor conditions of the equities and bond markets as evidenced by Malayan Banking Bhd and TM International Bhd,” he said, adding that both companies’ share prices fell heavily after the rights issue was announced.

“We believe most companies will avoid a funds-raising exercise where possible regardless of this liberalisation,” Eng said.

Bursa Malaysia Bhd chief executive officer Datuk Yusli Mohamed Yusof hopes to see more corporate exercises, and merger and acquisition activities in view of the speedy access to fund raising in the secondary market.

“The additional measures related to the capital market will certainly promote greater efficiency and allow listed issuers to raise additional funds expeditiously and with more certainty,” he said.

Yusli added that he was pleased with the timely stimulus package which was indeed comprehensive, covering more business sectors and addressing the concerns of the rakyat in managing the impact from the financial crisis.

“We hope this stimulus package will further help to cushion the impact of the global financial meltdown and, more importantly, sustain economic activities,” Yusli said.

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