KUALA LUMPUR (Jan 17): Engineering firm LFE Corp Bhd announced that it has proposed to raise cash via a private placement exercise of up to 18.15 million shares, equivalent to 10% of its issued and paid-up capital.

In a filing with Bursa Malaysia today, the cash-strapped company said proceeds from the private placement exercise will be used for general working capital to fund its day-to-day operations.

Based on an indicative issue price of 30 sen apiece for each of the 18.15 million shares placed, the company could raise around RM5.45 million.  

“For illustrative purposes only, the placement shares are assumed to be issued at an indicative issue price of 30 sen per Placement Share, which represents a discount of approximately 9.09% to the five-day volume weighted average market price (VWAMP) of LFE Corp shares up to and including Jan 16, 2017 of approximately 33 sen per share, being the market day prior to this announcement,” LFE Corp said in the filing.

LFE Corp said it will fix the price of the placement shares at a discount of not more than 10% of the  five-day VWAMP.

The company added that the price of the placement shares will not be lower than its par value of 30 sen per share.

The exercise is part of LFE Corp's regularisation plan after it exited the Practice Note 17 (PN17) status. It is also the first corporate exercise to be held under its newly-appointed chief financial officer Mokhtar Mohd Idris, who was recruited to the position on Jan 3.

As at Oct 31, 2016, LFE Corp’s cash and bank balance stood at RM41,000.

It added that proposed private placement may be implemented in multiple tranches within six months from the date Bursa Malaysia approves this plan.

Upon completion of the private placement exercise – in which MIDF Amanah Investment Bank Bhd is the principal adviser and placement agent – LFE Corp said its share capital will increase to 199,722 shares from 181,566 shares currently, which could dilute its earnings per share for financial year ending July 31, 2017.

“Barring any unforeseen circumstances, the proceeds to be raised from the proposed private placement are expected to contribute positively to the future earnings of the LFE Corp,” the company noted.

LFE Corp shares has fallen by 11% or four sen from 35 sen on Jan 6, and closed at 31 sen today, giving it market capitalisation of RM56.3 million.