KYM proposes private placement for working capital

PETALING JAYA (Nov 18): Property developer and construction company KYM Holdings Bhd on Thursday announced a proposed private placement of up to five million new ordinary shares of 50 sen each, representing 4.6% of the group's issued and paid-up capital.

The private placement exercise will be implemented in tranches, with the first comprising 1.3 million KYM shares, while the balance shall be issued subsequently based on prevailing market conditions.

The issue price of the first tranche is fixed at RM1.53 per placement share which represents a discount of 10% to the five-day weighted average market price of KYM traded on Bursa Malaysia Securities Bhd between Nov 10 and Nov 16 (both dates inclusive) or RM1.70 per share.

The issue price of subsequent tranches will be determined at a later stage and shall not be priced at more than 10% discount to the five-day weighted average market price of KYM shares immediately prior to the price fixing date to be determined, according to the statement.

The group plans to utilise the proceeds from the placement to fund its working capital requirements which include operating expenses such as staff salaries, development expenditure, promotional and marketing expenditure, and other expenses to improve the group's operations.

Assuming that all placement shares are issued at RM1.53 each, KYM is expected to raise gross proceeds of approximately RM7.65 million upon successful completion of the exercise. Of the total gross proceeds, RM7.55 million will be utilised for the group's working capital requirements.

The group said the rationale of the proposed private placement is to raise funds for working capital requirements, improve its cash flow position and provide continued support to its businesses.

It added that via the exercise, the group will be able to raise additional working capital without incurring interest costs compared with taking up additional bank borrowings.

It is also the most expeditious and cost-effective method of raising funds as opposed to the pro-rata issuance of securities such as rights issue which may financially burden the shareholders of the company.

Shareholdings of the group's major shareholders will be diluted due to the enlarged issued and paid-up capital to approximately 114.8 million units from 109.8 million units prior to the exercise.

For example, holdings of substantial shareholder Cheong Chan Holdings Sdn Bhd will be diluted to 19.4% from 20.3%, according to the announcement.

Subsequently, the group's net assets per share will also be diluted from 93 sen per share as at Jan 31 to 57 sen after the completion of the proposed private placement and other corporate exercises.

Total borrowings will rise to RM38.6 million from RM24.6 million as at Jan 31. Hence, its gearing ratio will also increase to 0.59 times against 0.25 times.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.