KUALA LUMPUR (Nov 15): Omesti Bhd has proposed a private placement of up to 10% or 51.4 million shares to independent third party investors at an issue price to be identified later, to raise up to RM25.7 million for bank repayments and working capital.

In a filing with the stock exchange today, the IT software and hardware distributor said the proposed exercise is the most cost-effective method to meet funding needs for further expansion, without incurring additional interest costs associated with bank borrowings or other debt instruments.

At an indicative issue price of 50 sen apiece, it represents a discount of approximately 2.55% to its volume weighted average market price (WAMP) for the five market days immediately preceding the price fixing dates, it said.

Indicatively, the proposed private placement is expected to raise gross proceeds of up to RM25.7 million, to be utilised within 12 months from the listing date.

The group plans to utilise RM12 million of the proceeds to repay part of its existing bank borrowings amounting approximately RM103.60 million thereby reducing its gearing ratio from 0.41 times to as low as 0.29 times.

Another RM12.93 million is earmarked to support Omesti’s capacity expansion initiatives and day-to-day operations.

As at Nov 14, Omesti has an issued share capital of RM230.59 million comprising some 430.88 million shares, excluding warrants.

The proposed private placement, which is expected to be completed by the second quarter of 2018, will see the group’s share capital enlarged to a maximum of RM309.17 million comprising 565.42 million shares.

“The proposed private placement is expected to contribute positively to the earnings of the group for the financial year ending March 31, 2018 (FY18) and for the future years, as and when the benefit of the utilisation of proceeds are realised,” it said in the filing.

Shares in Omesti closed up five sen or 9.43% today for a market capitalisation of RM249.91 million.