KUALA LUMPUR (Apr 1): Speakers and remote controls' component manufacturer VS Industry Bhd has proposed to raise up to RM81.36 million through the placement of 10% of its stake to third party investors that are yet to be identified.

According to VS Industry (fundamental: 1.3; valuation: 2.4)'s filing with Bursa Malaysia today, the group intends to raise at least RM80.91 million (minimum scenario) or RM81.36 million in a maximum scenario.

This is assuming an issue price of the placement share of RM3.93, based on an approximate 10% discount to the five-day volume weighted average market price (VWAMP) including Mar 31.

Nevertheless, VS Industry said the issue price and the third party investors will be fixed and identified later.

The proceeds will be mainly utilised for working capital, while RM500,000 will be serve for the estimated expenses for this exercise, VS Industry said.

"The working capital requirements include [the] operating expenses necessary for VS Industry's day-to-day operations to support its existing business operations such as staff salaries, payment of trade creditors and other payables, marketing and administrative expenses as well as other operational activities which include, among others, product innovation and research and development," the group said.

The group's board of director reasoned the exercise as the most appropriate avenue to raise fund in a cost-effective manner, save bank interest, and improve its financial position.

Apart from the private placement, the company is also proposing the termination of the company's existing employees' share option scheme, to be replaced with a new ESOS that will involve up to 15% of the company's issued and paid-up share capital.

"The existing ESOS, which became effective on Nov 19, 2010, will expire on Nov 18, 2015," the company said.

It also noted that the number of new VS Industrty shares issued since the implementation of the existing ESOS is 27.32 million, of which 54,000 new VS Industry shares are pending allotment and issuance as at the date of the announcement.

"There are no outstanding existing ESOS options which have yet to be exercised," it noted.

VS Industry noted that the new ESOS will only be implemented after the termination of the 
existing ESOS. If the proposed new ESOS does not occur, then the proposed termination will not proceed.

VS Industry fell 18 sen or 4.24% today, with 1.52 million shares done, giving it a market capitalisation of RM874.58 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.)