SHAH ALAM Sept 24 – Minetech Resources Berhad (Minetech), as part of its series of corporate exercises, has kick-started its fund raising activities by the implementation of a renounceable rights issue of up to 582,664,400 new irredeemable convertible preference shares (ICPS) at an issue price of RM0.03 per ICPS on the basis of one ICPS for every two existing shares held by entitled shareholders.
In the abridged prospectus issued on September 23, 2021 by the Company’s principal advisor TA Securities Holdings Bhd, Minetech expresses that any unsubscribed ICPS will be made available for excess applications by entitled shareholders and/or their renouncee(s)/transferee(s).
The Company also wishes to highlight the important last dates, which include the last date for the sale of provisional allotments on Sept 30, last date for transfer of allotments on Oct 4, last date for acceptance/payment and/or excess application/payment on Oct 8.
Minetech's major shareholders, namely Dato’ (Dr) Ts Awang Daud Awang Putera, Choy Sen @ Chin Kim Sang and Chin Leong Choy have collectively provided their undertakings to subscribe for 256.2 million ICPS which Minetech is expected to raise at least RM7.69 million from the right issue.
Having evaluated various fund raising methods, Minetech's board of directors shared that it deemed the right issues of ICPS exercise, alongside private placement of new Minetech shares to be the most appropriate avenue for it to raise the required funds without incurring interest costs associated with bank borrowings or through the issuance of debt instruments, hence minimising any potential cash outflow arising from interest servicing costs.
“As the recent COVID-19 pandemic and resulting business interruptions have an adverse effect on a global economic scale in the immediate and long term, Minetech views the ability to raise funds expeditiously as crucial to finance our operations by providing more flexibility and financial buffer in terms of cash flow management,” rationalised Minetech.
To recap, the rights issue of ICPS is part of a series of corporate exercises mooted by Minetech on March 15 which also entails a share capital reduction (SCR), private placement, diversification, amendments to the company’s constitution and share issuance scheme (SIS).
According to Minetech, the SCR of RM90 million will see the corresponding credit arising from the reduction being used to reduce or eliminate accumulated losses. While the SCR will not result in any adjustment for the market price and number of Minetech shares held by shareholders, it will enhance Minetech credibility with customers, suppliers and investors.
Following the SCR, Minetech proposed a rights issue of ICPS (as mentioned above) and a private placement of up to 349,598,600 new Minetech Shares to be issued pursuant to the private placement at a price to be determined later.
In terms of gross proceeds, Minetech expects its rights issue of ICPS exercise to raise between RM7.69 million to RM17.48 million; and its private placement exercise to raise approximately RM55.94 million, bringing the total proceeds expected to be raised by the Company to be between RM63.62 million to RM73.42 million.
Proceeds raised will be channelled to fund expenditure for construction projects; repayment of borrowings; development cost for its solar power plant; future business investments and/or acquisitions; expansion of quarry division; diversifications into the oil & gas (O&G) sectors; expansion of its bituminous products division; working capital as well as to fund expenses for Minetech’s corporate exercises.
Minetech’s wholly-owned subsidiary, Minetech Construction Sdn Bhd, has been registered as a RPVI (Registered Solar PV Investor) with Sustainable Energy Development Authority Malaysia (SEDA).
Minetech’s Executive Chairman Dato' (Dr) Ts Awang Daud Awang Putera has said that the corporate exercises will assist the company in improving its financial performance in the next financial year.
“At the same time, it will help raise capital for our diversifications into renewable energy and expansion of the construction segment, which are viable businesses that continue to see growing demand,” he projected.
"We believe both industries can potentially contribute 25% or more to our net profit", he added.
At the close of yesterday’s (September 23) trading, Minetech was up RM0.005 or 4.55% to RM0.115 with 3.76 million shares traded, thus valuing the company at RM134.01 mil. – DagangNews.com