KUALA LUMPUR (Nov 10): Aluminium manufacturer and distributor PMB Technology Bhd is planning a one-to-two share split, followed by a renounceable rights issue with free warrants to raise about RM200 million — over half the company's current market value — for a new factory to manufacture metallic silicon.

The company is also planning to add the manufacturing of metallic silicon — a substance used to strengthen aluminium alloys and is widely used in solar energy and electronics industry and in the chemical industry, as the base material for making silicone — to its core business.

It said the renounceable rights issue will involve the issuance of five-year, 3% irreedeemable convertible unsecured loan stocks (ICULS).

While the number of ICULS, entitlement basis and issue price have yet to be fixed, the issuance will come with warrants issued at no cost to entitled shareholders, at a basis to be determined.

Based on an illustrative issue price, nominal value and conversion price of RM2.03 per ICULS, on an indicative basis of two ICULS for every three PMB shares held (2-for-3), and one warrant for every two ICULS subscribed (1-for-2), the exercise could raise up to RM216.53 million, it said.

The rights issue is conditional upon the share split having been completed. On completion of the rights issue, it will seek shareholders' approval for the proposed diversification.

Its current issued share capital is RM46.94 million, comprising 80 million PMB shares. The share split will raise its share base to 160 million shares. 

PMB said it expects the rights issue to raise RM200 million — before the exercise of the warrants — and will use that to build a facility to manufacture metallic silicon, buy the necessary equipment, with the remainder to defray any expenses related to the issuance.

It envisions the addition will contribute to at least 25% of its net profits and or net assets in the future. "The group is also positioned to take advantage of the PMB Silicon Facility's geographic location at Samalaju Industrial Park, Bintulu Sarawak, as there are industries located there, which require metallic silicon in their production line," it said.

It expects the proposals to be completed within the second quarter of 2018.

Separately, PMB announced that its net profit grew 9% year-on-year to RM2.45 million in its third quarter ended Sept 30, 2017 (3QFY17), from RM2.24 million, while revenue grew 49% to RM127.48 million, from RM85.41 million, on higher contribution from its construction and fabrication segment. 

For the first nine months of FY17 (9MFY17), the group's net profit grew 10% y-o-y to RM7.76 million, from RM7.05 million, while revenue expanded 39% to RM351.80 million from RM253.92 million. 

Its board of directors declared a third interim single tier dividend of 1 sen per share in respect of FY17, to be paid on Dec 21.

Moving forward, PMB said it has successfully executed the 52MW of Power Purchase Agreement with Syarikat Sesco Bhd, thus opening the opportunity for PMB to venture into the metallic silicon business in Samalaju Industrial Park, Sarawak.

"The group is confident that the new business would provide a positive platform into the commodity market in the near future," PNB added. 

PMB shares slipped 3 sen or 0.63% to settle at RM4.70 today, for a market capitalisation of RM378.40 million. The stock has jumped over 218% in the last 12 months.