KUALA LUMPUR (Oct 17): Avillion Bhd plans to raise up to RM22.67 million via a private placement involving up to 20% of its total number of issued shares to independent third party investors to be identified later.

In a filing with Bursa Malaysia today, the company said the proposed placement will continue to help ease the group’s cash flow requirements by providing it with immediate funds, without incurring additional interest costs that could further weaken the group’s financial performance.

The proposed placement will entail the issuance of up to 188.88 million new shares, at the indicative price of 12 sen per share.

Of the amount to be raised, RM10 million will be used for asset enhancement and refurbishment of the group's hotels and resorts, RM6 million to repay bank borrowings, RM3.32 million for general working capital, and RM3 million for its property development project in Johor. The balance RM350,000 will be used to defray the corporate exercise's estimated expenses.

Using part of the proceeds raised to further pare down its borrowings will also result in annual gross interest savings of about RM440,000, based on the average cost of borrowings of about 7.33% per annum for the financial year ended March 31, 2019 (FY19), said Avillion. The company has been incurring annual interest costs of around RM7 million to RM8 million over the last three financial years.

On completion of the proposed placement, the company plans to issue up to 566.64 million free warrants on the basis of one free warrant for every two shares held by entitled shareholders at a date to be fixed.

The proposals are expected to be completed in the first quarter of 2020.

Avillion shares closed unchanged at 13 sen today, valuing the company at RM122.77 million. Over the past year, the stock has fallen 47% from when it was trading at 24.5 sen.