KUALA LUMPUR: Velesto Energy Bhd has announced a capital reduction of RM1.20 billion under Section 116 of the Companies Act 2016.
The amount will be added to the company’s retained earnings or used to offset any accumulated losses.
In a statement, Velesto said this exercise is a strategic step to optimise the company’s capital structure and position it for future distribution to shareholders.
The capital reduction does not involve any cash outflow from the company and its subsidiaries or changes to the number of shares held by shareholders.
It is a non-dilutive exercise that does not affect shareholders’ equity, ownership structure, or the net asset value of the group.
Following the completion of the capital reduction, Velesto’s retained earnings are expected to be approximately RM1.33 billion and RM1.06 billion at the company and group levels, respectively, based on the unaudited financial results, as at Dec 31, 2024.
Velesto president Megat Zariman Abdul Rahim said this exercise marks an important step in creating long-term value for shareholders.
“We previously undertook a similar capital reduction exercise in 2020, and since then, we have made notable progress in our financial recovery, recording profits in both financial years ended Dec 31, 2023 and Dec 31, 2024.
“We believe it is ultimately about building strength and setting a solid foundation for the next phase and future distribution to shareholders.
“It optimises our balance sheet, puts us in a stronger capital position, and even opens the door to return free cashflow to our shareholders,“ he said.
The exercise is subject to shareholders’ approval and sanction by the High Court of
Malaya.
Barring unforeseen circumstances, it is expected to be completed by the third
quarter of 2025.
