MRCB plans private placement to raise up to RM612 mil

KUALA LUMPUR (Nov 17): Malaysian Resources Corp Bhd plans to undertake a private placement of up to 20% of its issued and paid-up share capital to its major shareholder Gapurna Sdn Bhd and independent third-party investors to be identified later, which could raise up to RM612.08 million for property development activities and borrowings repayment.

The property and infrastructure developer told Bursa Malaysia yesterday that this entails the placement of up to 493.61 million new shares.

Based on an indicative issue price of RM1.24 per placement share, the exercise is expected to raise gross proceeds of between RM443.072 million (minimum scenario) and RM612.08 million (maximum scenario).

Gapurna has given an undertaking that it would subscribe to 60 million of the placement shares, and indicated its intention to subscribe to a further 60 million, subject to, among others, when the proposed private placement is implemented, the actual issue of the placement shares, and its cash flow and availability of external financing.

Gapurna, which is controlled by Tan Sri Mohamad Salim Fateh Din (pictured), holds a 16.7% stake in MRCB and is its second-largest shareholder after the Employees’ Provident Fund (EPF) (38.37%).

After the private placement, Mohamad Salim’s indirect stake could rise up to 19.5%, while the EPF’s stake could be diluted to as much as 23.14%. 

As at Oct 30, its issued and paid-up capital stood at RM1.787 billion comprising 1.787 billion shares. Pursuant to the private placement, this could rise to as much as RM2.962 billion, comprising 2.962 billion shares.

The bulk or 60.7% of the private placement’s proceeds would go to its property development activities, followed by working capital (23.3%) and repayment of borrowings (13.9%); the rest would be used to defray expenses related to the proposed private placement. The exercise is expected to be completed in the second quarter of 2016. The group expects the utilisation of the placement proceeds to contribute positively to its future earnings.

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This article first appeared in The Edge Financial Daily, on Nov 17, 2015. Subscribe to The Edge Financial Daily here.