KUALA LUMPUR (Aug 8): Plasticware products manufacturer cum property developer Acme Holdings Bhd has proposed to undertake a bonus issue of up to 59.69 million free warrants on the basis of one warrant for every four existing shares.
The exercise price of the warrants has been fixed at 25 sen apiece, Acme said in a stock exchange filing yesterday.
This represents a 3.05% premium to the five-day volume weighted average market price (VWAP) of its shares of 24.26 sen apiece as at Aug 6.
The entitlement date will be determined later, it added.
Assuming full exercise of the warrants at the price of 25 sen each, Acme could raise maximum gross proceeds of RM14.92 million, which will be used for working capital.
At the same time, Acme is proposing to raise up to RM21.72 million through a private placement, at 24.26 sen per share.
The placement involves the issuance of up to 89.53 million shares, representing 30% of the group’s enlarged issued shares, to third party investors to be identified later, Acme said.
The placement shares will be issued at a price of not more than 10% discount to the five-day VWAP of Acme shares, immediately before the price-fixing date. Based on an indicative issue price of 24.26 sen, Acme expects the exercise to raise gross proceeds of between RM16.74 million and RM21.72 million.
Out of this total, the group intends to utilise up to RM20 million to finance the acquisition of Medan Tropika Sdn Bhd, which owns two parcels of land measuring 178,841 sq ft that are situated in the locality of Bandar Baru Air Itam in Penang. Acme will also settle an outstanding amount of RM14.26 million, which Medan owes the creditor.
The two parcels of land have a net book value of RM33.9 million as at May 31, 2019.
"Any shortfall in proceeds to be raised via the proposed private placement for the payment of the proposed Medan acquisition, will be funded by the group’s internal funds and/or bank borrowings," Acme said.
Medan is currently 70% owned by Goh Soo Sing, while the remaining 30% stake is held by Mohammad Zubni Ismail.
On Jan 13, 2016, Medan had entered into a joint venture (JV) agreement with Focal Products Sdn Bhd for the latter to develop the land into a proposed mixed residential and commercial
piece. Under the JV, Medan and Focal are entitled to 20% and 80% of the net sale proceeds of the units, respectively.
"The estimated gross development value and the estimated gross development cost of the proposed development provided by the management of the company, are approximately RM194.37 million and RM146.65 million respectively, with an estimated gross development profit of RM47.72 million," Acme said.
The development cost for the proposed project is expected to be funded through a combination of the group’s internal funds and/or bank borrowings, and/or other fundraising corporate exercises.
Concurrent to the proposed Medan acquisition, Acme intends to acquire Focal from Liew Kok Earn and Chia Cheong Yun for RM2 million cash, which will be funded via the group’s internal funds.
Acme said the proposed acquisitions provide a good opportunity for it to expand its land bank and existing property development activities by leveraging on the strategic location of the land and the planning permission held by Focal for the proposed development. The group’s current land bank includes a 1.37-acre plot and another 11.14-acre plot located in Seberang Perai Utara, Penang.
Barring any unforeseen circumstances, Acme expects the proposals to be completed in the last quarter of 2019.
TA Securities Holdings Bhd has been appointed as the adviser to the proposals.
Acme shares closed up two sen or 8.51% at 25.5 sen yesterday, with 12,000 shares done, giving it a market capitalisation of RM58.64 million.
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