KUALA LUMPUR (Sept 27): Ho Hup Construction Bhd has proposed to raise up to RM17.79 million via a private placement of up to 10% of its total issued shares to third party investor(s) to be identified later.
Ho Hup said it will benefit from the interest savings generated from the utilisation of proceeds raised from the proposed exercise for partial repayment of borrowings, as well as working capital for its construction projects.
In a filing with Bursa Malaysia yesterday, Ho Hup said the proposed private placement entails the issuance of up to 37.85 million new shares. As at Sept 24, Ho Hup has total issued shares of RM207.57 million comprising 374.89 million shares and 3.65 million existing outstanding options which have been granted but are unexercised under an employee share option share (ESOS) issuance scheme implemented on Aug 21, 2015.
Assuming the placement shares are issued at an indicative issue price of 47 sen per placement share, which represents a discount of 8.91% to the five-day volume weighted average market price of Ho Hup shares of 51.6 sen apiece up to Sept 24, the proposed exercise is expected to raise up to RM17.79 million.
Of this, RM8.5 million has been earmarked to repay borrowings and another RM8.49 million for working capital. The rest will be used for expenses in relation to the proposed exercise.
"The proposed private placement is expected to contribute positively to the group's earnings and EPS for the financial year ending Dec 31, 2019," said Ho Hup.
Barring any unforeseen circumstances, the proposed exercise is expected to be completed in the fourth quarter of 2019, it added.
M&A Securities Sdn Bhd has been appointed as the adviser and placement agent for the proposed exercise.
Shares of Ho Hup closed one sen or 1.98% lower at 49.5 sen yesterday, bringing it a market capitalisation of RM185.57 milion.