KUALA LUMPUR (Sep 2): Dayang Enterprise Holdings Bhd is seeking a private placement to raise up to RM304.43 million for additional working capital and potential investment in projects which are synergistic with its existing business.
In a filing with Bursa Malaysia, the oil and gas (O&G) service provider says it is proposing to issue up to 82.5 million new shares, equivalent to 10% of its current share base, to third party investors, which it has not identified yet.
“The proposed private placement provides an opportunity for Dayang to tap into the equity capital market for funds and take advantage of the current robust demand from investors to participate in the growth prospects of the O&G sector in Malaysia” it said on the rationale for the share placement.
It will enable Dayang to raise funds without incurring interest cost compared to bank borrowings, and represents the most appropriate avenue of raising funds given the quick timeframe for completion of the exercise, it adds.
Dayang says it expects the private placement exercise to be completed within six months after the stock exchange approval.
While Dayang has yet to fix a price for the placement shares, the company says the Bursa Malaysia’s ruling allows the placement shares to be issued at a discount of not more than 10% of the five-day volume weighted average market price (VWAP) before the price-fixing date.
For illustrative purposes, Dayang has an indicative issue price of the placement shares at RM3.69, being the five-day VWAP of its stock up to Aug 26. This works out to RM304.43 million in total.
According to the filing, Dayang says a total of RM299.53 million will be used for additional working capital requirements and potential investment projects which are synergistic to its existing business.
The remaining RM4.9 million from the private placement will be used to settle the estimated expenses for the exercise.