KUCHING: Sarawak Cable Bhd (SCB) has proposed a private placement that could raise up to RM7.29 million for its working capital.
The power and telecommunication cables manufacturer’s proposed private placement entails the issuance of up to 31.705 million shares, representing up to 10 percent of the existing number of the company issued shares, to third party investors yet to be identified.
The placement exercise may be implemented in one of more tranches within six months from the approval date from Bursa Malaysia Securities Bhd.
The issue price for each tranche of the placement shares shall be determined separately and will be in accordance with market-based principles.
The new shares will not be priced at more than 10 percent discount to the five-day volume weighted average market price (VWAP) of SCB shares immediately before the price fixing date,SCB said in a filing with Bursa Malaysia.
The five-day VWAP of SCB shares is RM0.2479sen .
For illustrative purposes,based on an indicative issue price of RM0.23 per placement share,the placement exercise will generate gross proceeds of up to RM7.29 million.
From the proceeds, RM7.196 million is intended to be used by SCB and its subsidiaries to meet working capital requirements and the balance RM96,000 for estimated expenses of the fund- raising exercise.
SCB group has three business segments — power & telecommunciation cables,transmission lines construction and power generation.
The money will be used for the procurement cost of raw materials for the power and communication cables segment, installation and commissioning cost of several transmission line projects as well as the construction and commissioning cost of the mini-hydro plant project in North Sumatera, Indonesia which is expected to be fully operational by the current quarter.
“After due consideration of the various methods of fund raising, the board is of the opinion that the proposed private placement is currently an appropriate avenue of fund raising as it enables the group to raise funds expeditiously without incurring interest cost as compared to bank borrowings.
“In addition, the proposed private placement will further strength the capital base of the company,” it added.
To raise more working capital, SCB is seeking its shareholders’ approval to sell an industrial property in Selangor for RM65 million at an upcoming EGM on Oct 16.
The company is expected to make a net gain of RM18.7 million from the disposal.
Chairman Datuk Sri Mahmud Abu Bekir is SCB’s single largest shareholder with a stake of about 26.61 percent,followed by Sarawak Energy Bhd (16.53 percent) and HNG Capital Sdn Bhd (9.89 percent).
SCB has appointed Kenanga Investment Bank Bhd as the principal adviser and placement agent for the proposed private placement.
