KUALA LUMPUR (Nov 10): KNM Group Bhd has proposed a private placement of up to 10% of its issued shares to independent investors to raise up to RM53.32 million, mainly to repay bank borrowings.
 
In a filing with Bursa Malaysia, KNM said the exercise involves the issuance of up to 213.28 million placement shares, at an issue price to be fixed.
 
The expected maximum sum raised is based on an indicative issue pric of 25 sen apiece, which is based on an approximate 7.27% discount to the volume weighted average market price (VWAMP) of KNM shares for the five market days up to Nov 9, 2017 of 26.96 sen.
 
Of the proceeds to be raised, it said RM40 million will be used to repay bank loans, while the remaining RM13.32 million will be used for working capital, the group said.
 
As at Nov 8, KNM had a total outstanding borrowing of about RM1.27 billion.
 
The proposed repayment will reduce KNM’s overall gearing level from 0.53 times to 0.50 times, and result in an expected annual interest savings of about RM2.3 million per year, assuming a weighted average effective interest rate of 5.8% per annum.
 
However, the group’s earnings per share (EPS) will be “proportionately diluted”, as a result of an increase in the number of shares after the exercise.
 
The proposed private placement is expected to be completed by the first quarter of 2018.