KUALA LUMPUR (June 7): JAKS Resources Bhd is launching another cash call, this time to raise up to RM69.54 million from a proposed rights issue of warrants to expedite the construction of its power plant project in Vietnam, for partial repayment of bank borrowings, and to fund preliminary expenses relating to exploring new renewable energy projects in Southeast Asia.
The proposed rights issue of warrants involves the issuance of up to 278.16 million warrants on the basis of one warrant for every two JAKS shares held on a date to be determined later.
“As the company, on March 30, completed a private placement exercise of up to 10% of its issued shares, the board views it is more appropriate that the next fundraising exercise would involve the issuance of securities on a pro rata basis to reduce the dilutive impact on the existing shareholders,” said JAKS in a filing with Bursa Malaysia yesterday.
Based on the indicative issue price of 25 sen per warrant, JAKS is expected to raise between RM68.24 million and RM69.54 million from the proposed exercise. The exercise price will be fixed at a 30% discount to the five-day volume weighted average market price.
“JAKS will also be able to raise further proceeds of up to RM278.16 million as and when the warrants are exercised. The issuance and exercise of the warrants will allow the company to raise funds without incurring additional interest expenses. In addition, the exercise of the warrants will increase JAKS shareholders’ funds which will consequently improve its gearing levels,” JAKS said.
JAKS’ share capital stood at RM598.97 million, comprising 545.94 million shares, as at May 31, 2018. JAKS expects the proposed exercise to be completed in the second half of 2018.
In a statement yesterday, JAKS chief executive officer Andy Ang Lam Poah said the proposed corporate exercise is to reward shareholders, as the exercise price is at a significant discount.
JAKS shares closed down three sen or 2.04% at RM1.44 yesterday, with a market capitalisation of RM786.16 million.
This article first appeared in The Edge Financial Daily, on June 7, 2018.