KUALA LUMPUR (April 5): Engtex Group Bhd has proposed to undertake a private placement of up to 44.55 million shares, representing 10% of its issued and paid-up share capital, to raise up to RM53.46 million in proceeds.
In a filing with Bursa Malaysia, Engtex said the private placement shares will be issued to third party investors to be identified later.
The company said it is unable to determine the actual amount of proceeds to be raised from the proposed private placement.
The issue price of the placement shares will be determined and fixed by the board at a later date, after approvals have been obtained, the company added.
However, Engtex said based on an indicative issue price of RM1.20 per placement share, it is expected to raise RM36.35 million from an issuance of up to 30.29 million placement shares, under a minimum scenario.
The company said it is expected to raise up to RM53.46 million from an issuance of up to 44.56 million shares, under a maximum scenario.
Engtex said the exercise will strengthen the company’s capital position, as it plans to use the proceeds raised from the exercise, to pay its bank borrowings, which would give rise to interest savings and reduction in its gearing level.
Based on the company’s financial year ended Dec 31, 2014, Engtex’ gearing stood at 1.16 times, which is expected to reduce to 0.98 times, after the proposed private placement, under the minimum scenario.
Under the maximum scenario, its gearing could be reduced further to 0.73 times.
Engtex also said the private placement will increase the size and strength of its shareholders’ funds and potentially improve the liquidity and marketability of its shares.
However, there will be a proportionate dilution in earnings per share (EPS) due to the increase in the number of Engtex shares arising from the proposed private placement.
Nevertheless, the proposed utilisation of proceeds to be raised from the proposed private placement is expected to result in positive contribution to the future earnings of Engtex Group, the filing read.
Engtex shares closed 5 sen or 4% lower at RM1.20, with a market capitalisation of RM372.57 million.
ENGTEX (5056) - Engtex proposes private placement for up to RM53.46m to pare down debt
http://www.theedgemarkets.com/my/article/engtex-proposes-private-placement-rm5346m-pare-down-debt
