KUALA LUMPUR: Mah Sing Group Bhd has proposed to issue up to RM325 million nominal value seven-year redeemable convertible secured bonds which would be mainly to finance land acquisitions and working capital.
It said on Thursday, Sept 9 the bonds would be convertible at the option of the bond holders into new shares at a conversion price 15% above the five-day volume weighted average market price of the shares on a price-fixing date to be determined by the board.
“The coupon rate is up to 3.50% per annum payable in arrears on a semiannual basis,” the property developer said on Thursday, Sept 9.
Mah Sing also proposed to increase its authorised share capital from RM500 million comprising one billion shares of 50 sen each to RM1 billion comprising two million shares.
The proposed increase in authorised share capital is to cater for the issuance of new Mah Sing shares as a result of the conversion of the bonds and for future increases in the issued and paid-up share capital.
Mah Sing said its three-pronged strategy was:
(i) in the immediate term, to continue with its focus on medium to high end residential, industrial and commercial projects as these projects are profitable and cashflow generative;
(ii) in the medium term to focus on acquiring sizeable landbank for potential mass housing development either on outright purchase or joint venture basis and;
(iii) over the long term to continue to explore overseas markets with high population growth to tap their population-led demand for properties.
“The proposed bonds Issue will provide Mah Sing with additional funds at an attractive fixed financing cost to implement its strategy and capitalize on opportunities as and when they arise,” it said.
Based on the unaudited consolidated financial statements of the Mah Sing group as June 30, 2010, the shareholders funds were RM858.0 million and its net gearing ratio was 0.05 times.
“The group still has additional capacity to raise funds via the debt market for its present and future expansion plans,” it said.
Mah Sing said the bonds would enable Mah Sing to lock in fixed interest costs at a coupon rate of up to 3.5% per annum, thereby reducing the group’s exposure to fluctuating interest rates and enable the Mah Sing group to manage its cashflow more efficiently.
It added the fixed interest cost would also help rebalance the group’s overall financing portfolio which is primarily based on floating rates.
Most of the current borrowings of the group are at interest rates ranging from 4% per annum to 5% per annum.
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