KUALA LUMPUR (April 8): Paragon Globe Bhd has proposed a rights issue to raise up to RM56 million to help pay for a property acquisition in Johor and fund the construction of a medical centre in Selangor.

The rights issue of up to 746.62 million shares will be issued on the basis four rights shares for every one existing share held on an entitlement date to be announced later, the property developer said in a filing with Bursa Malaysia yesterday.

For illustrative purposes, the issue price of the rights shares is assumed at RM0.075 per share, representing a discount of RM0.191 or 71.8% to the theoretical ex-rights price of RM0.266, calculated based on the five-day volume weighted average market price of RM1.03 on March 31.

The group said RM25.45 million of the proceeds will be used for the partial settlement of the consideration of freehold land in Johor Bahru. Upon the acquisition of the property, the group's land bank is expected to increase to 82.09 acres.

Another RM25 million of the proceeds will be used to fund the construction of a medical centre with a built-up area of 253,354 square feet located in Sepang. The project is expected to be completed in the fourth quarter of 2023.

The remaining RM5 million of the rights issue proceeds will be allocated for the group’s working capital, said Paragon Globe.

Paragon Globe said it currently has 50.99 acres of land bank for development, and will continue to enhance its land bank via strategic tie ups or joint ventures with land owners or through acquisitions.

“Nevertheless, taking into consideration the outlook of the property sector in Malaysia, the management will exercise extreme caution for its existing development projects to ensure the development projects' success without compromising on quality while improving operational efficiency,” it said.

Paragon Globe said the rights issue is expected to be completed by the third quarter of 2021.

Paragon Globe shares closed 11 sen or 10.88% higher at RM1.07 yesterday, giving the group a market capitalisation of RM198.69 million.

Get the latest news @ www.EdgeProp.my

Subscribe to our Telegram channel for the latest stories and updates 

Click here for more property stories