rights issue


E&O raises RM127.6m via private placement of new shares

KUALA LUMPUR, March 19 — Eastern & Oriental Bhd (E&O) has raised about RM127.6 million following a private placement exercise of 130.23 million new E&O shares at 98 sen per unit. In a statement today, the company said the shares,…

Metronic eyes opportunities in ‘smart city’ projects

SHAH ALAM: Loss-making intelligent building management systems specialist Metronic Global Bhd is eyeing for US$1 billion (RM4.08 billion) market share of smart city projects across Malaysia, Europe, the US, Middle-East and South East Asian regions in the next three years, according to its CEO, Brian Hoo Wai Keong.

“Our aim is not too far fetch. US$1 billion market share is less than 1% of global investments in smart city technologies, which is expected to rise to US$135 billion by 2021, on the back of rapid telecommunications connectivity and hyper urbanisation,” he told reporters at a media briefing today.

Hoo said the group’s subsidiary Metronic Engineering Sdn Bhd recently inked a three-year memorandum of understanding (MoU) with Hong Kong Exchange-listed China Singyes New Materials Holdings Ltd’s unit Zhuhai Singyes New Materials Technology Co Ltd to secure smart city technology solutions projects.

Singyes is a specialised smart city solutions provider with green building technology, renewable/solar energy solutions and fully integrated ecological agricultural products, having export, manufacturing and research and development base in Zhuhai, China.

“Metronic stands to gain from this collaboration with Singyes, to offer world-class proven smart city technology solutions, connecting infrastructures with Internet of Things and 5G capabilities, to support 11th Malaysia Plan’s smart city initiative, coupled with other local councils, township develop-ments, community parks and integrated government departments, just to name a few.

Currently, Hoo said, Metronic is ifinalising tenders of several potential engineering projects worth up to RM300 million in Malaysia and across the region. The group’s tender book stands at around RM90 million.

Additionally, Hoo said, the group’s ongoing cash call of up to RM42 million from its renounceable rights cum warrants issue will be put to good use to generate more profits for the company by increasing its project tender success rates.

The rights issue will involve the issuance of up to 645.34 million rights shares at an issue price of 6.5 sen per share and up to 484.01 million free warrants.

The bulk of the proceeds raised will be allocated for Phase 1 of its mixed housing development in Kuala Krai, Kelantan, which has an estimated gross development cost of RM29.2 million, and an estimated gross development value of RM34.3 million, with the remainder to be used for working capital for its engineering projects.

For the second quarter ended Dec 31, 2018, the group reported a net loss of RM1.82 million, with a revenue of RM6.79 million. Its net loss for the first six months of the financial year stood at RM3.4 million. The group has changed its financial year end from March 31 to June 30.

Singtel to buy US$525m of Bharti Airtel stock in Indian telco’s fundraising

SINGAPORE/BANGALORE: Singapore Telecommunications Ltd (Singtel) said it will buy roughly US$525 million (RM2.14 billion) worth of Bharti Airtel stock as part of the Indian telecoms operator’s plan to raise US$4.6 billion (RM18.8 billion) through shares and bonds.

Airtel hopes to use the money to cut debt and shore up its balance sheet at a time when the broader Indian telecom industry is grappling with a price war triggered by the entry of Reliance Jio Infocomm Ltd.

Under the fundraising plan, announced last month, Airtel plans to sell new shares worth 250 billion rupees (RM14.6 billion) for 220 rupees apiece, or a nearly 30% discount to its current stock price. It will raise another 70 billion rupees via foreign-currency bonds.

Airtel’s net debt stood at more than US$15 billion as of Dec 31, while its current market value is around US$17.5 billion. Singtel had a net debt S$9.75 billion (RM29.3 billion) at the time.

Singtel said it will buy 170 million new shares in Airtel, India’s No. 2 telco in terms of subscribers. This will dilute its effective interest in Airtel to 35.2% from 39.5%.

Airtel’s two other major shareholders – Bharti Group and Bharti Telecom – intend to subscribe to their full entitlement in the rights issue, while Singapore’s state-backed GIC will commit about 50 billion rupees, Airtel and Singtel said.

Dayang’s earnings will trend better compared to losses

KUCHING: Dayang Enterprise Holdings Bhd’s (Dayang) forward earnings trend will be be better, compared to losses in previous years, analysts project. “We believe forward earnings trend will definitely be better as compared to losses in the prior two years, buoyed by its current order-book of approximately RM3 billion, providing some earnings visibility for the next […]

Holding costs, forex losses hit E&O’s Q3 earnings

PETALING JAYA: Eastern & Oriental Bhd (E&O) suffered a net loss of RM8.80 million in the third quarter ended Dec 31, 2018 compared with a net profit of RM21.98 million a year ago due to holding costs and unrealised foreign exchange (forex) losses.

In a filing with Bursa Malaysia, the group said its operating profit of RM50.18 million during the quarter was dampened by unrealised foreign exchange loss of RM11.74 million and holding costs of RM44.55 million payable for the option to purchase land which was not exercised.

Revenue for the quarter fell 22.58% to RM256.95 million from RM331.90 million a year ago due to lower revenue contribution from the property and hospitality segments.

Excluding the holding cost and unrealised forex losses, the group said its recurring pre-tax profit for the quarter would have been RM91.6 million, 10.39% higher than RM82.9 million recorded a year ago.

For the nine months ended Dec 31, 2018, net profit fell 61.60% to RM24.15 million from RM62.89 million a year ago while revenue fell 9.25% to RM636.34 million from RM701.22 million a year ago.

“As at Dec 31, 2018, we achieved a lower net gearing of 0.39 times compared with 0.58 times as at Dec 31, 2017 and our cash balance is RM98 million higher year-on-year at RM727.8 million while our total bank borrowings reduced by 13.66% to RM1.5 billion,” said E&O managing director Kok Tuck Cheong.

For the property development segment, the group recorded cumulative sales of about RM251 million during the quarter, representing a 6.45% growth year-on-year. The group also reduced its inventory level by 28.37% to RM232.4 million.

The group had recently proposed a private placement of new shares and also a rights issue of shares with warrants.

“While the group’s financial position is as strong as ever with net gearing of 0.39 times, the proposed equity raising will put the group on even stronger footing as we prepare for our next growth trajectory. As such, E&O’s fundamentals remain intact and we are committed and confident of our prospects going forward,” said Kok.

Is high finance growing a social conscience?

LONDON, Feb 20 — Financiers who turnaround companies by injecting them with capital are increasingly considering the environmental and social impact of their investments, according to a survey published today by consulting firm PwC. The survey…

Asia Brands scraps private placement

PETALING JAYA: Asia Brands Bhd (ABB) has aborted its private placement exercise to issue up to 46.53 million new shares, representing up to 20% of its enlarged issued shares.

This is because it had achieved its objective to raise funds from its rights issue exercise for the repayment of the Islamic medium term notes (Tranche 1, Series 3) of RM40 million due on March 18, it told the stock exchange today.

The rights issue exercise, which involves an issuance of up to 116.32 million new shares at an issue price of 35 sen per rights share on the basis of one right share for every one share held, was aimed to raise gross proceeds of between RM30.15 million and RM40.71 million.

ABB said the private placement was proposed to be implemented to facilitate the group to comply with the public shareholding spread requirement under Paragraph 8.02(1) of the Listing Requirements of Bursa Securities in the event ABB’s public shareholding spread falls below 25% following the implementation of the rights issue.

“As the public shareholding spread of ABB after the implementation of the rights issue remains above 25%, ABB has decided not to proceed with the implementation of the private placement,” it added.

Based on an indicative issue price of 50 sen per placement share, the private placement was previously expected to raise gross proceeds of up to RM23.26 million.

Versatile Creative proposes private placement to raise RM4.4m

PETALING JAYA: Versatile Creative Bhd has proposed to undertake a private placement of up to 12.91 million new shares in the company, representing up to 10% of the company’s existing issued share capital to raise up to RM4.40 million.

“Assuming the placement shares are issued at the illustrative issue price, up to RM4.40 million is expected to be raised from the exercise,” Versatile Creative said in a stock exchange filing. The placement shares are intended to be placed out to third party investors to be identified later.

The proceeds of up to RM4.25 million will be used to finance the operations of Versatile Creative and its subsidiaries, which includes the purchase of raw materials such as coated boards and resin for the group’s paper box and plastic products respectively, payment to suppliers as well as staff related costs, business development expenses and general overheads.

With the availability of additional funds, the group may purchase raw materials in larger quantities and will be able to negotiate for lower pricing from its suppliers which is envisaged to further improve the gross margin of the group.

“The board is of the opinion that the proposed private placement is an appropriate avenue for raising funds as it will allow the company to raise funds expeditiously as the general mandate has been obtained and as opposed to other fund raising options such as a rights issue.

“It will also enable the company to raise the requisite funds without incurring additional interest expense, thereby minimising any potential cash outflow in respect of interest servicing; and could potentially increase the liquidity of the group’s shares in view of the larger capital base.”

The exercise is expected to contribute positively to the future consolidated earnings of the group through the proposed utilisation of proceeds raised from the issuance of the placement shares.

The earnings per share of the group is expected to be diluted as a result of the increase in the number of shares in issue.

The proposed private placement is subject to approvals being obtained from Bursa Securities for the listing and quotation of the placement shares on the Main Market of Bursa Securities.

Barring unforeseen circumstances and subject to the approvals of the relevant authorities being obtained, the exercise is expected to be completed by the third quarter of 2019.

E&O loses RM318m in market cap on cash call news

PETALING JAYA: Investors reacted negatively towards Eastern & Oriental Bhd’s (E&O) proposed fund raising exercise of up to RM550.3 million with its share price tumbling 24 sen or 22.02% to a multi-year low of 85 sen today.

The heavy selling pressure led to RM318 million of its market capitalisation being wiped off.

It was the top fourth loser on Bursa Malaysia today on 36.7 million shares done.

On Monday, E&O announced a proposed fund raising exercise which would raise proceeds of RM250 million to RM550.3 million, to fund its Seri Tanjung Pinang (STP) Phase 2 project in Penang and repay bank borrowings.

“Although the company seems to have identified a taker for the placement shares, we think investor sentiment on E&O may turn cautious given the magnitude of the equity call,” RHB Research said in its report today.

The research house, however, noted that the need for financing is understandable, based on the funding requirement for the reclamation and infrastructure capital expenditure on STP 2A, 2B and 2C, as well as working capital to kick-start new high-rise projects such as The Conlay (GDV: RM900 million), which is slated for launch at the end of 2019, and The Peak (GDV: RM280 million) in 1H 2020.

“We believe that as a result of tight cash flow, slow high-end property sales and weak market sentiment, the maiden launch of STP 2A’s Plot 14 has been delayed until 1H 2020,” it added.

The total proceeds of around RM350 million to RM400 million from the fund raising exercise would be about 24-28% of the stock’s current market cap. After factoring in the impact from the placement and rights issue, RHB Research reduced its target price to RM1 from RM1.24 previously.

It maintained E&O’s net profit estimates but reduced its earnings per share (EPS) forecasts due to the expected dilution from the placement and rights issue.

PublicInvest Research maintained its “neutral” call on E&O but reduced its target price to RM1 from RM1.30 previously.

“This comes as a negative surprise as we had believed earlier that the group would raise funds by disposing non-strategic assets and/or get more strategic partners for its STP Phase 2 development. Based on illustrative issue price of RM1.12, our RNAV (revalued net asset value) could be diluted from RM4 per share to RM2.80 to RM3.30,” it said.

Meanwhile, Affin Hwang Capital, which maintained its “buy” call on E&O with RM1.55 target price, believes the long-term prospects for the group remain good, despite the short to medium term impact of the fund raising exercise on investor sentiment.

“We believe the overhang from the equity issuance will dampen sentiment on the stock in the short to medium term, but the long-term prospects for E&O remains good with the scheduled completion of 253-acre STP 2A by September 2019,” it said.

“We gather that the entrepreneurs and substantial shareholders Datuk Seri Tham Ka Hon (owns 20.6% stake) and Datuk Tee Eng Ho/Tee Eng Seng (owns 15.2%) will likely undertake to subscribe for their rights issue entitlement. This will show the entrepreneurs’ commitment and shore up support for the proposed equity issuances,” it added.

Eastern & Oriental skids 19.7% on RM550.3m cash call

PETALING JAYA: Eastern & Oriental Bhd (E&O) shares tumbled as much as 21.5 sen or 19.7% to 87.5 sen after announcing plans to raise up RM550.3 million.

At 12.10pm, the stock was trading 20.5 sen or 18.8% lower at 88.5 sen on 1,6145,800 shares done.

Short selling of E&O shares has been suspended due to the sharp fall in share price.

The property developer yesterday announced that it will undertake a private placement and rights issue with warrants to fund the Seri Tanjung Pinang Phase 2 (STP2) project and repayment of bank borrowings.

STP2 is E&O’s key development project which will be completed in phases over 15 to 20 years.

Under the maximum scenario, RM200 million raised will be used for repayment of borrowings, RM300 million for property projects, RM48.8 million for general working capital and RM1.5 million for estimated expenses of the proposed exercise.