KUALA LUMPUR (March 26): WCE Holdings Bhd has proposed a renounceable rights issue of five-year, zero coupon redeemable convertible unsecured loan stocks (RCULS) and free detachable warrants, in a bid to raise up to RM417.81 million to fund additional costs of the West Coast Expressway.

The RCULS are to be issued at 100% of their nominal value at 50 sen each, on the basis of five RCULS for every six existing shares, while one warrant is to be issued for every three RCULS.

The group, in its filing with Bursa Malaysia, said it intends to inject the majority of its proceeds as equity, convertibles and subordinated advances into its 80%-owned subsidiary, West Coast Expressway Sdn Bhd (WCESB).

The funds will support the additional cost of RM180 million incurred for the construction of the expressway. The cost has risen due to higher actual land acquisition costs as compared to the projected land costs.

This has caused an increase in the project cost to RM6.12 billion from RM5.94 billion, for which WCE signed a concession agreement with the government in January 2013.

Under the agreement, WCE had agreed to fund RM1.2 billion via equity, convertibles and subordinated advances from the shareholders of WCESB, which is now increased to RM1.38 billion.

According to WCE, it has thus far injected RM513.49 million in the subsidiary via a term loan and proceeds raised from various corporate exercises since 2013.

The board intends to fund part of the remaining RM634.44 million via the proposed rights issue, which is targeted to raise between RM256.34 million and RM417.81 million.

It will also fund the balance via the remaining proceeds of RM3.08 million raised from its disposal of 500 million shares in Talam Transform Bhd and an expected RM30 million pending the disposal of an additional 400 million shares in the same company.

"Pending the completion of the proposed rights issue, the company may obtain a bridging loan to facilitate and expedite its equity injection into WCESB," WCE said.

Shares in WCE closed up 1 sen or 0.9% at RM1.12, giving the group a market capitalisation of RM1.12 billion.