Tadmax to raise RM18.6m via private placement

UALA LUMPUR: Timber concessionaire and property developer Tadmax Resources Bhd plans to raise up to RM18.6 million by issuing some 37.276 million shares in private placement to finance the purchase of a piece of land and its property development expenditure.

From the proceeds, RM7 million will be allocated for the land purchase and RM4.6 million for the property development, it said in a filing with Bursa Malaysia yesterday.

It also intends to put aside RM3.5 million to repay bank borrowings within a year, which will result in interest savings, to enable the group to reduce its existing gearing ratio.

Based on Tadmax’s latest quarterly results as at June 30, 2014 (2QFY14), its total borrowings amounted to about RM221.5 million.

For the land purchase, Tadmax on June 19 entered a share sale agreement with Maxcorp Development Sdn Bhd for the acquisition of the entire equity interest in Ganggarak Development Sdn Bhd for RM2.

Prior to that, Maxcorp on April 3 signed a sale and purchase agreement (SPA) with Perbadanan Labuan for the purchase of a parcel of leasehold land measuring about 16.8ha for RM7 million, which Maxcorp now intends to novate to Tadmax, at cost. Hence, the proposed allocation for the land purchase is in relation to the settlement of the SPA, said Tadmax.

On top of the private placement, the group has also proposed to issue 72 million new shares of 50 sen each to settle a debt of approximately RM36.78 million that it owed its director, Datuk Faizal Abdullah, as at Aug 12.

Upon the complete issuance of the new shares to Faizal, Tadmax would have settled approximately RM36 million of the debt, it said.

The issue price of the private placement as well as the new shares to be issued to Faizal will be determined and announced at a later date. Both proposals are expected to be completed by the fourth quarter of 2014.

In a separate filing with the bourse, Tadmax said its net loss was reduced substantially by 81% to RM3.515 million in 2QFY14 from RM18.242 million a year ago, due mainly to no share of associates’ losses in 2QFY14, compared to a loss of RM8.1 million a year earlier.

For the quarter, the group generated RM8.446 million revenue, contributed by its industrial supply business segment.

For the six-month cumulative period (1HFY14), its net loss reduced by 68% to RM8.489 million, from RM26.549 million a year before, on revenue of RM11.55 million revenue compared to RM124,000 a year earlier.

On its future prospects, Tadmax said its industrial supply and property business segments are expected to contribute positively to the group’s revenue for the remainder of the current financial year.

The group is also actively pursuing and identifying opportunities in the property business segment comprising development and construction.

“The recent acquisition of Ganggarak Development is an important initiative of the group into this direction in expanding the group’s earning base and to capitalise on available and suitable opportunities that may arise in the property sector,” it said.

Its board of directors is cautiously optimistic that the measures taken would enable the group to improve its performance in the current financial year.

This article first appeared in The Edge Financial Daily, on August 19, 2014.


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