Bina Puri Seeks RM250 Million Capital Cut to Clear Losses in Debt Overhaul

Capital Reduction at Core of Plan

Bina Puri Holdings Bhd is moving to slash its share capital by RM250 million, directing the entire amount toward wiping out accumulated losses that have weighed on the Malaysian property developer's balance sheet. The capital reduction forms the centerpiece of a broader debt restructuring plan that addresses RM343.98 million in outstanding liabilities as of June 30, 2025.

The company announced that the share capital reduction will involve canceling RM250 million of its issued share capital. The credit generated from that cancellation will immediately offset accumulated losses, with any surplus flowing into retained earnings for future use at the board's discretion. The filing to Bursa Malaysia makes clear that every component of the restructuring is inter-conditional, meaning the entire package stands or falls together.

Scheme of Arrangement Under Companies Act

Bina Puri has proposed a formal scheme of compromise and arrangement with its creditors under Section 366 of the Companies Act, a legal mechanism that allows financially distressed companies to negotiate restructured terms with stakeholders while avoiding liquidation. The scheme breaks down the RM343.98 million liability pile into several tranches, each addressed through a distinct mechanism.

The largest single piece is a renounceable rights issue of up to 372.89 million new shares, offered on the basis of two rights shares for every five existing shares. Each rights share will carry one free detachable Warrant C, bringing the total number of new warrants to 372.89 million. This equity infusion is designed to recapitalize the company and provide liquidity for operational needs.

Debt Settlement Through Equity and Structured Repayment

A portion of the outstanding liabilities, totaling RM126.58 million, will be restructured into sustainable debt repayable over seven years. This longer maturity gives Bina Puri breathing room to generate cash flow from projects without the immediate pressure of near-term maturities.

Another RM88.06 million will be settled by issuing up to 251.60 million settlement shares at 35 sen apiece. Creditors accepting this route will become equity holders, diluting existing shareholders but reducing the cash burden on the company. An additional RM28.55 million in liabilities will convert into up to 81.57 million option shares, also priced at 35 sen and subject to put and call options that give both parties flexibility over the timing of conversion.

Bina Puri will also issue up to 127.76 million redeemable convertible unsecured Islamic debt securities, valued at 35 sen each, to settle RM44.72 million of debt. These instruments combine features of debt and equity, offering creditors the option to convert into shares at a later date while preserving Islamic finance compliance.

Creditor Waivers and Current Capital Structure

Creditors have agreed to permanently waive RM34.40 million of debt, a concession that reflects the severity of Bina Puri's financial position and the limited alternatives available to lenders if the company were to enter insolvency proceedings. The waiver reduces the total liability burden without requiring any cash outlay or equity issuance.

As of the latest practicable date, Bina Puri had an issued share capital of RM366.32 million, comprising 893.02 million shares. The company also has 392.1 million outstanding warrants from a 2023 issuance, expiring April 17, 2028, with an exercise price of 20 sen per warrant. The proposed restructuring will significantly alter this capital structure, adding hundreds of millions of new shares and warrants to the register.

Regional Context for Distressed Developers

Bina Puri's restructuring unfolds against a backdrop of stress in Southeast Asian property and construction sectors, where developers have struggled with project delays, rising material costs, and tighter credit conditions. Malaysian construction firms in particular have faced margin compression as government infrastructure spending has moderated and private sector demand has softened.

The use of Section 366 schemes has become more common in Malaysia as companies seek court-supervised frameworks to negotiate with creditors outside formal insolvency. The mechanism offers a middle path, allowing viable businesses to reset their capital structures while creditors retain more value than they would in a liquidation scenario. Success hinges on shareholder and creditor approval, as well as court sanction of the scheme.

The inter-conditional nature of Bina Puri's proposal means that if any single element fails to gain approval, the entire restructuring collapses, potentially forcing the company into more drastic measures. Shareholders will need to weigh the heavy dilution against the alternative of insolvency, while creditors must decide whether the proposed recovery rates exceed what they could expect in a wind-down.