KUALA LUMPUR (April 28): Muhibbah Engineering (M) Bhd is proposing to undertake a private placement of up to 10% of its issued share capital to third party investors to raise gross proceeds of up to RM111.93 million.

In a filing with Bursa Malaysia today, Muhibbah said the investors and the issue price will be announced later, after all relevant approvals for the proposed private placement have been received.

"As the proposed private placement may be implemented in one or more tranches with the board’s decision, there could potentially be several price fixing dates and issue prices," it added.

Muhibbah said the corporate exercise entails the issuance of up to 48.25 million placement shares, which will expand Muhibbah’s issued share capital to 530.71 million shares or RM265.35 million.

Assuming an issue price of RM2.32 per placement share, which represents a discount of 2.11% to the five-day weighted average market price of Muhibbah shares up to and including the latest practicable date of RM2.37 per Muhibbah share, the proposed private placement is expected to raise gross proceeds of between RM108.88 million and RM111.93 million.

Muhibbah said out of the total gross proceeds, it plans to use RM75 million to pare down the group's borrowings, which will result in interest cost savings amounting to RM3.68 million.

Another RM35.36 million will be used as working capital, and some RM1 million is to be used to defray listing expenses.

Barring any unforeseen circumstances, Muhibbah targets to complete the proposed private placement by the fourth quarter of this year.

Shares in Muhibbah closed 7 sen or 3.07% higher at RM2.35 today, for a market capitalisation of RM1.08 billion.