O&C Resources Berhad (“OCR” Berhad) is a public listed company whichincorporated on 28 July 1997 as an investment holding company. It wasestablished by Dato Tee How Cut. It manufactures and exports condoms, baby careaccessories in Malaysia, Europe and Africa. It operates through manufacturing, trading,construction, property development, and others segments. It is located in Petaling Jaya,Malaysia. Based on their productsbrands, it named ‘Japlo’ for baby products and ‘Romantic’ and ‘Playsafe’ forcondoms.
Based on their financialstanding, it has current assets and current liabilities with 101,481,981 and 15,940,606in 2016. In 2017, it has current assets and current liabilities with124,093,361 and 38,505,755. OCR Company does not have any liquidity problems inboth years and they have enough capital to pay its debts. Share capital isincreases from 57,120,200 in 2016 to 68,745,171. Under cases Borland’sTrustee v Steel Bros & Co Ltd (1901) 1 Ch 279, it defines the shareare the interest of shareholder measured by a sum of money for purpose of liabilityand interest in. It is good in their current share capital because they gain extracapital allotted dividends to shareholders in 2017. Irredeemable convertiblepreference shares are decreases from 33,070,635 in 2016 to 32,232,195 in 2017. An irredeemable preference shares definesan investors who issued it cannot get their capital back which has no maturity periodto be redeemed.
A reserve is increases from (4,627,099) in 2016 to 1,176,758 in2017. Reserve capital is a part of uncalled capital that cannot be used bycompany and it only used for backup purpose that the creditors have a guaranteefund return when the company is winding up. This company has prepared reserveto their creditors and they rise up the amount in 2017. OCR Company raise fundspurposely they want to develop RM204.
94 million projects in KL city centre. Theyplan to develop a service apartment block with an estimated gross developmentvalue of RM204.94 million within the vicinity of the Petronas Twin Towers. Therefore,they plan to raise through combination of fund-raising exercise internallygenerated funds and bank borrowings. During the financial year of 2017, OCR company raised its issuedand paid-up ordinary shares from RM57,120,200 to RM68,745,171. The first way theyraising the funds are issuance of 9,317,920 new ordinary shares from theexercise of warrants from 2011 until 2016 at the fixed price of RM0.35 perwarrant.
The second way is issuance of 2,560,000 new ordinary shares from theexercise of Share of Issuance Scheme (“SIS”) at the fixing price of RM0.33 pershare. The third way is issuance of 16,768,800 new ordinary shares from theconversion of 16,768,800 Irredeemable Convertible Preference Shares (“ICPS”) withcombination of one ICPS and RM0.45 in cash. Additionally, they did not issueany debentures in their company. Besides that, OCR Company also raises theircapital by borrowing from bank. They borrow long-term loans and short-termloans to increase their funds. In my opinion, I mostly prefer thatissuance shares to the public is the most appropriate to company because when alot of shareholders invest capital to the company, the company equity willincreases.
Debentures are the creditors who lend money to the company and needto pay the debts back plus interest charges. Besides that, if the company isout of capital, they do not need to pay the dividends to shareholders. Anissuance share is much better than debentures. Under Section 375(1), debentureholder has the right to appoint a receiver when company has breached adebenture instrument, then the receiver will enter and take the possession propertyof company. It will destroy the company capital going to winding up andshareholders will leave the company. As my conclusion, I will choose issuanceof shares to public to avoid the creditors have the rights to take away ourcompany properties and convert it into money.