KUALA LUMPUR (Oct 19): Priceworth International Bhd (PWI) is acquiring Rumpun Capaian Sdn Bhd for RM260 million, to be funded by a proposed private placement and special issue.

Rumpun owns 99.99% of Anika Desiran Sdn Bhd (ADSB), which was awarded a 100-year concession in 1997 to carry out harvesting, forest management and rehabilitation, and industrial tree planting within a forest reserve area in Trus Madi, Sabah, known as Forest Management Unit 5 (FMU5).

In a filing with Bursa Malaysia, PWI said the acquisition presents an opportunity for the group to boost its earnings significantly, by virtue of access to significant concession for the 101,161-hectares forest reserve.

It added that the timber harvesting and replanting rights will result in a sustainable supply of timber for the optimisation of PWI’s currently-underutilised logging equipment and wood processing facilities.

“The proposed acquisition shall also enable PWI to strategically create value within the PWI group, by combining the FMU5 forest management unit with its existing plywood manufacturing operations for a monetisation exercise of the same, via the proposed listing,” it said, referring to its proposal to list its wholly-owned GSR Pte Ltd on the Singapore Exchange (SGX).

To fund the acquisition, the group proposed a private placement of up to 64.2 million shares, representing 10% of the issued and paid-up share capital of PWI, along with a special issue of up to 141.25 million shares.

PWI expects to raise RM6.42 million from the private placement and RM14.12 million from the special issue.

The group has also proposed a rights issue of up to 1.69 billion rights shares at 10 sen per share, and a bonus issue of up to 847.48 million shares on the basis of two rights shares for every one existing share held, and one bonus share for every two rights shares. It estimates proceeds of RM84.75 million from the rights issue.

PWI also proposed the listing of GSR on the Singapore Exchange, with PWI to hold 70% equity interest in the unit, upon completion of the public listing.

The proceeds from the proposed listing will also go towards its purchase of Rumpun.

It said an application will be submitted to SGX for the proposed listing in the second half of next year.