Zecon to raise RM46.1m proceeds via ICPS rights issue

KUALA LUMPUR 21 July - Construction and property firm Zecon Berhad’s right issue of irredeemable convertible preference shares (ICPS) proposal which amounted to 576.4 million has been approved by its extraordinary general meeting (EGM).

The proposal is to address its current funding requirements to meet its short term obligations and liabilities as well as strengthen its financial position.

Zecon in a statement today said, the minimum scenario could see the exercise raise proceeds of between RM19.4 million to RM46.1 million (maximum scenario) depending on the response of its shareholders.

ICPS would mark an issue price of RM0.08 each and a conversion rate of RM0.16.

“Under the corporate exercise, each shareholder who already owns one Zecon share will receive four ICPS shares. Shareholders who opt to subscribe to the ICPS will provide entitled shareholders with the opportunity to further increase their equity participation in the firm.

“The entitlement date will be determined later. As the ICPS will be listed and traded on the main market of Bursa Securities, depending on the future performance of the group, shareholders may be able to benefit from future capital appreciation of the ICPS,” said the statement.

For future viable investments, the  will spend RM3 million (maximum scenario) or RM1 million (minimum scenario) within the next 12 months.

A total of RM26.2 million will be spent on working capital (maximum scenario) or RM3.4 million (minimum scenario) within the next 6 months.

Similarly, RM5.4 million will be spent on the partial repayment of bank borrowings (maximum scenario) or RM3.6 million (minimum scenario) within the next 3 months while another RM700,000 will be spent for listing expenses.

“The rights issue of the ICPS augurs well for the company as it would further stimulate cash flow which in turn would further boost Zecon's net profit.” the firm added.

To recap, Zecon's net profit for the nine months ended March soared despite facing hiccups brought about by the movement control order.

Zecon's net profit surged 59.7% to RM9.15 million in its third quarter ended 31 March 2020 from RM5.73 million in the same comparable quarter a year ago mainly attributed by the Hospital Kanak-Kanak Universiti Kebangsaan Malaysia and the Pan Borneo projects. – DagangNews.com