This article first appeared in The Edge Financial Daily on October 17, 2017

KUALA LUMPUR: WCT Holdings Bhd plans to raise up to RM242 million via a private placement — the second fundraising exercise this year — to fund infrastructure and property development projects and reduce debt.

The construction and property development group said the placement entails the issuance of up to 140 million new shares, equivalent to around 10% of the total share capital, to be alloted to selected third party investors.

Earlier this year, WCT raised about RM178 million by placing out 100.46 million shares at RM1.77 per share.  

In a filing with Bursa Malaysia yesterday, the group said 58% or RM140.2 million from the proceeds of the latest placement has been earmarked to fund government-led mega infrastructure projects and the group’s property development projects, which include The Lead Residences in Klang and the Waltz Residences in Kuala Lumpur.

The infrastructure projects, it added, include the construction of viaduct gateways for both the light rail transit (LRT3) Line 3 and the mass rapid transit (MRT2) Line 2, upgrading of the Pan Borneo Highway in Sarawak, and procurement and construction of civil works at the Refinery and Petrochemical Integrated Development (Rapid) in Johor.

WCT also said that it will allocate around 41% or RM100 million from the private placement proceeds to pare down its debt burden, which stood at RM1.26 billion as at end-June.

Based on the weighted average effective interest rate of 4.808% per year, WCT said the repayment of the borrowings will save it from incurring an annual interest cost of RM4.81 million.

“After taking into consideration various methods of fundraising available, such as debt financing and bank borrowing, as well as the capital structure of the company, the board is of the view that the proposed new placement is the most appropriate avenue for the group to raise the additional working capital and to repay bank borrowings as and when required in an expeditious manner,” WCT said.

“At the same time, (the private placement) will enable the company to enlarge its equity base after taking into account the group’s current level of business operations,” it added.

WCT’s share price dropped one sen or 0.59% to RM1.68 yesterday, for a market capitalisation of RM2.38 billion.