The Group is undergoing a major corporate exercise of a reverse takeover by Instacom and the Group will effectively changed its name from I-Power Berhad to Instacom Group Berhad. For the benefit of investors, i highlighed the salient points below and how it would affect your shareholdings upon completion of the corporate exercise.
1.. The scheme involves an acquistion by I-Power of the entire issued and paid-up share capital of Instacom comprising 4,500,000 Instacom shares for a purchase consideration of RM102,000,000 to be satisfied entirely by the issuance of 501,000,000 new Consolidated Shares at an issued price of RM0.20 per Consolidated Share after the Share Consolidation.
Note : The new shares are issued at RM0.20 and not RM0.10. This means that the cost to Instacom shareholders is RM0.20 per share.
2.. Share Consolidation and Bonus Issue
a) Consolidation of 10 Ordinary Shares of RM0.01 each into 1 Ordinary Share of RM0.10 each in I-Power after the Share Capital Reduction
b) Bonus Issue of new Consolidated Shares to be credited as fully paid up to the existing shareholders of I-Power on the basis of 3 Bonus Shares for every 2 existing Consolidated Shares held
Note : It is important for investors to understand how the Share Consolidation and Bonus Issue works and how it would affect your existing shareholdings and your shareholding costs. Refer to example below.
For ease of computation, we take the assumtion that you had 100,000 shares which you bougth at 8c (total cost of investment RM8,000). Upon Share Consolidation (completion of 2a above), you will be left with 10,000 shares. Of this balance of 10,000 shares, you are entitled to an additional of 15,000 FREE Bonus Shares (refer 2b above - for every 2 Consolidated Shares you get 3 Bonus Shares).
Therefore in totality, for every 100,000 I-Power shares that you own today, you will get 25,000 new Instacom Shares upon completion of the Corporate Exercise. Based on your total cost of investment of RM8,000, your new cost of per share of Instacom is 8,000/25,000 = 32c.