KUALA LUMPUR (March 7): Icon Offshore Bhd has proposed to undertake a capital reduction to eliminate its accumulated losses as well as a five-to-one share consolidation to reduce the volatility of its share price.

According to a bourse filing on Tuesday (March 7), the offshore support vessel (OSV) outfit intends to reduce its share capital to RM317.32 million from RM1.15 billion, an RM830 million adjustment which will be utilised to eliminate its unaudited accumulated losses of RM822.41 million as at Dec 31, 2022.

The balance is to be credited to Icon Offshore’s retained earnings account and may be used in a manner the board deems fit in the best interest of the group.

“The proposed capital reduction is intended to address the past accumulated losses of the group and rationalise the statement of financial position of the group.

“Further, by eliminating the entire accumulated losses of the group, the group would have an improved capital base, which may facilitate the declaration of dividends in the event the company has retained earnings in the future," it added.

Subject to the requisite approval from the group’s shareholders at an extraordinary general meeting (EGM) to be convened, an order from the High Court will be sought to sanction the proposed capital reduction.

Meanwhile, Icon Offshore has also proposed a five-to-one share consolidation exercise, which would see its share base shrink from 2.71 billion shares at a closing price of 11.5 sen as at Feb 13, 2023, to 541.31 million consolidated shares at a theoretical adjusted reference price of 57.5 sen per share.

“As at Feb 13, 2023, Icon had a total of 2.71 billion issued shares and the closing price was 11.5 sen per share. Therefore, a small absolute movement in the share price may result in high movement in percentage terms.

“Consolidating the shares would lead to a reduction in the number of shares available in the market and an increase of the reference/trading prices of the shares,” it said, adding that this may reduce the volatility of the trading price for the shares.

The share consolidation is subject to the approvals of Bursa securities as well as the group’s shareholders at the aforementioned EGM to be convened.

“Barring any unforeseen circumstances and subject to all required approvals being obtained, the proposals are expected to be completed by the third quarter of 2023,” Icon Offshore added.

Shares in Icon Offshore closed half a sen or 5.56% higher at 9.5 sen, giving the group a market capitalisation of RM257.12 million.