KUALA LUMPUR (Jan 15): Integrated Rubber Corp Bhd's (IRCB) share price jumped as much as 10% on Tuesday afternoon after the financially troubled rubber glove manufacturer roped in a former industry executive as a major shareholder to helm the firm.
Cheang Phoy Ken, the former managing director and owner of delisted rubber glove producer Seal Polymer Industries Bhd, has secured management control of IRCB. This follows Cheang's acquisition of about 10% equity interest from the controlling shareholders.
IRCB said last week it had appointed Cheang, 59, as managing director of IRCB, following the resignation of Tan Keng Beng, 50, after his family sold a 10.98% stake to Cheang via an off-market deal.
At 3.22pm, IRCB was trading at 16 sen, with 13 million shares done, after rising as much as 1.5 sen to 17 sen earlier. The stock was among the 10 most actively traded counters on Bursa Malaysia.
A dealer said the emergence of new major shareholders tends to have a positive impact on penny stocks. "The rise in IRCB shares is possibly due to this reason," the dealer told theedgemalaysia.com over the telephone on Tuesday.
IRCB’s share price has doubled (100%) so far this year, significantly outperforming the FBM KLCI’s 0.3% decline, according to Bloomberg data.
Cheang was previously the major shareholder of Seal Polymer, which was acquired and privatised by rival Supermax Corp Bhd at RM1.10 a share in 2007. Seal Polymer was delisted that year.
IRCB also announced the appointment of Cheang's son, Sean Kar Seng Cheang, 24, as an executive director and Lim Boon Huat, 43, as a non-executive board member.
Exchange filings show that the senior Cheang had emerged as a substantial shareholder in IRCB on Jan 4 after acquiring 65 million shares from the Tan family. At 15 sen per share, the off-market deal was worth RM9.75 million.
The sellers were Keng Beng, as well as his father Tan Koon Poon and nephew Tan Loon Guan, both of whom also relinquished their positions on the board of the company.
The Tan family's stake is held via private vehicle Chip Lam Seng Bhd, which still owns 11.3% following the off-market transaction. This compares with 25.43% as at June 2012, according to IRCB's annual report.
Bursa Malaysia updates indicate that following the off-market deal, Cheang raised his stake in IRCB on Jan 8 to 11.23% after acquiring another 1.48 million shares on the open market.
Changes in IRCB’s board and major shareholders’ equity interest came at a time when the Practice Note 17 (PN17) company was contending with weaker financials.
IRCB told the exchange in December 2012 that Malayan Banking Bhd (Maybank) had recalled the loan facilities given to the company's wholly-owned subsidiary Comfort Rubber Gloves Industries Sdn Bhd (CRG) with immediate effect.
Maybank recalled the loan facilities after CRG had defaulted on RM64.2 million worth of debt obligations, according to IRCB. As the defaulted sum was more than 5% of the net assets of IRCB, Bursa Malaysia placed IRCB under PN17 status due to its financial condition.
IRCB made a cumulative net loss of RM18 million in the nine months ended Oct 31, 2012, compared with a net loss of RM17.93 million a year earlier.