Cuscapi proposes RM190 million capital reduction to wipe out accumulated losses

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Cuscapi proposes capital reduction

Highlights

Cuscapi proposes a capital reduction of up to RM190 million to eliminate accumulated losses and strengthen its financing position, subject to regulatory approval and expected to be completed in the second quarter of 2027.
The company also proposes a share issuance scheme of up to 15% of its issued shares at a discount of no more than 10%, with the proceeds to be used for the group’s working capital.
Cuscapi shares closed down 11.11% at four sen on Friday, giving it a market capitalisation of RM34.02 million, while major shareholding changes involved Wong Thean Soon and Tan Boon Seng.

This article was translated from the original. Read the original version by our correspondent here.

Proposal details and implementation timeline

As reported by The Edge Malaysia, Cuscapi said in a filing with Bursa Malaysia on Friday that it had proposed a capital reduction of up to RM190 million to rationalise its financial position, better reflect the value of its assets and strengthen its position to secure better financing and business opportunities.

The proposal was submitted about a month after a private placement involving 94.5 million new shares was approved. As at 16 Oct, Cuscapi’s issued share capital stood at RM203.37 million, comprising 944.88 million shares. Based on the illustrative example in the filing, shares from the private placement could increase its total share count to as many as 1.04 billion.

Separately, the company also proposed an offer of up to 15% of its total issued shares to eligible individuals, including the group’s non-executive directors, under a share issuance scheme with a five-year vesting period. The issue price will be set by the board based on the five-day volume-weighted average market price of Cuscapi shares immediately before the offer date, at a discount of no more than 10%. Proceeds from the scheme will be used for the group’s working capital.

Both proposals remain subject to approval by Bursa Malaysia Securities, shareholders at the upcoming extraordinary general meeting, and any other relevant parties or authorities, where required. The company expects both to be completed by the second quarter of 2027.

Market implications and changes in shareholdings

The capital reduction proposal comes as Cuscapi’s market value remains small relative to the scale of the key adjustment, with its shares closing down half a sen, or 11.11%, at four sen on Friday. This gave the company a market capitalisation of RM34.02 million.

In terms of shareholdings, former substantial shareholder of Cuscapi and Zetrix AI Bhd managing director Wong Thean Soon had earlier come under pressure following margin calls. He disposed of nearly an 11% stake through direct business transactions in mid-September, paving the way for investor Tan Boon Seng to emerge as a substantial shareholder. Wong still holds a 2.5% stake in Cuscapi.

Bursa Malaysia midday trading highlights that we previously reported on highlighted counters showing unusual price and volume movements based on a proprietary algorithm, distinguishing between positive and negative momentum. In that article, several stocks were identified as being in the negative momentum group, with the caveat that momentum indicators are merely market signals (not buy or sell recommendations) and are typically temporary.

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