KUALA LUMPUR (July 20): YKGI Holdings Bhd plans to raise a maximum of RM5.53 million in a proposed private placement of up to 48.12 million shares or 10% of the total number of issued shares, at an issue price to be determined later.

In a filing on Wednesday (July 20), the steel materials manufacturer, trader and service provider said its total issued shares stood at 441 million as at July 7. It has 21.73 million outstanding redeemable convertible preference shares, 40.44 million outstanding employees’ share option scheme options and no treasury shares.

Based on the indicative price of 11.5 sen per placement share, and no more than 10% discount to the five-day volume-weighted average market price of YKGI, the group said it would raise up to RM5.53 million.

YKGI hopes to use the proceeds for the working capital of the company and its subsidiaries, with an estimated 70% allocation of proceeds for purchase of raw materials and payment to suppliers and the other 30% for general operating expenses and other administrative expenses.

It had obtained approval for the proposed private placement from its shareholders at an annual general meeting convened on June 24.

YKGI said that barring any unforeseen circumstances, the proposed private placement is expected to be completed by the end of 2022. UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the adviser and placement agent for the proposed private placement.

In terms of prospects, the company said that the steel sector is expected to perform in line with the higher level of economic activities but potential challenges include geopolitical tensions, higher inflation and rising interest rate.

The group intends to continue to adopt prudent cost management strategies and closely monitor cash flows and gearing levels whilst pursuing growth.

YKGI’s shares closed unchanged at 12.5 sen, valuing the group at RM52.98 million.