KUALA LUMPUR: Spring Energy Resources Bhd, which is primarily in quarry and bauxite mining, is planning an initial public offering (IPO) to have its securities listed on the Main Market of Bursa Malaysia to expand its business operations.

The IPO involves the issuance of 110 million new shares with a par value of 20 sen each and represents about 17.7% of its enlarged issued and paid-up share capital, though no indicative time frame was revealed.

Of the new shares, 32 million will be made avaialble for public application, while five million will be set aside for eligible directors and employees, according to its prospectus exposure to the Securities Commission Malaysia (SC).

The remaining 73 million will be for application by way of private placement to identified bumiputera investors approved by the Ministry of International Trade and Industry.

Besides quarry and bauxite mining — to which it also supplies labour and premix plants for production of premix products — Spring Energy, incorporated in 1997, is also involved in civil engineering projects associated with quarry operations.

Spring Energy’s businesses are operated solely in Malaysia, and all its customers are domestic.

While the issue price of the new shares is yet to be fixed, Spring Energy plans to use 46.2% of the proceeds raised for working capital, 30.5% for purchasing machineries and equipment, 17.4% for repayment of bank borrowings, with the remainder 5.9% to defray listing expenses.

The bulk of its allocation for working capital is the for day-to-day operations to be incurred from newly identified quarry sites or bauxite mining sites.

This includes the purchase of raw materials, particularly diesel and explosives, maintenance fee expenses, and operational expenses.

Spring Energy plans to recommend and distribute minimum dividends of 20% of its annual profit after tax to shareholders.

For the financial year ended Dec 31, 2014 (FY14), Spring Energy posted a net profit of RM34.92 million, almost double the RM17.75 million it saw a year ago, backed by a revenue of RM296.81 million, which rose 39.54% from RM212.7 million in FY13.

Earnings per share for FY14 was 5.63 sen versus 2.86 sen in FY13. The group had a net gearing ratio of 0.64 times as at FY14.

RHB Investment Bank Bhd is the principal adviser, underwriter and placement agent for Spring Energy’s IPO.

This article first appeared in digitaledge Daily, on August 20, 2015.