KUALA LUMPUR (April 1): Integrated provider of interconnect solutions ConnectCounty Holdings Bhd has proposed a rights issue of up to 800.9 million new irredeemable convertible preference shares (ICPS) to partly fund its proposed RM25-million acquisition of Kejuruteraan Asastera Sdn Bhd (KASB).

In a filing with Bursa Malaysia today, ConnectCounty said the ICPS is priced at an issue price of 5 sen per share, on the basis of three ICPS for every one existing ConnectCounty share held. The entitlement date will be determined later.

Concurrently, the company is also proposing to increase its authorised share capital to facilitate the issuance of the ICPS and new shares that will arise from the conversion of the ICPS.

The issuance of ICPS are expected to raise a minimum of RM16.5 million, of which RM12.5 million will be allotted to partly fund the proposed acquisition of KASB, while the remaining proceeds raised will be utilised as working capital and capital expenditure for the group.

In line with the acquisition, ConnectCounty is also proposing to diversify its business to include electrical, mechanical and telecommunication engineering contracting.

The company had previously announced on Jan 20 that it had executed a heads of agreement (HoA) with Lai Keng Onn and Choong Gaik Seng for the proposed acquisition of the entire equity interest in the electrical, mechanical and telecommunications contractor, KASB.

In a separate media statement, ConnectCounty executive director Ang Chuang Juay said the proposed acquisition will enable the group to leverage on KASB’s successful business model, proven track record and growth trajectory, to tap the vast opportunities in Malaysia’s property and building sector.

“The proposed acquisition will enable the group to leverage on KASB’s successful business model, proven track record and growth trajectory, to tap the vast opportunities in Malaysia’s property and building sector,” he said.

According to Ang, KASB continues to receive requests for tenders at a regular rate and the average success rate of tendering for the company is more than 40%.

KASB’s stable of clients include some of Malaysia’s largest developers and construction companies, and the company has successfully managed large-scale and complex projects throughout the nation.

“We are confident that the demand for engineering contracting service will continue to grow from strength to strength in the foreseeable future, and as a public listed company, Connect ConnectCounty aims to become an enabler that can elevate KASB to greater heights of success,” he said.

The proposed corporate exercises is subject to the approval of ConnectCounty shareholders, capital market regulators and other relevant authorities, and is expected to be completed in the third quarter of this year.

ConnectCounty (fundamental: 0.95; valuation: 0.3) shares closed up 1 sen or 5.13% today to 20.5 sen, with a market capitalisation of RM40.2 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)