KUALA LUMPUR (Dec 6): Bintai Kinden Corp Bhd said on Monday that it has proposed to undertake a private placement of up to 20% of its existing issued shares to raise RM35 million mainly to repay borrowings.

In a bourse filing, the group said the proposed private placement will involve the issuance of up to 111 million Bintai Kinden shares, to be placed out to independent third party investors to be identified later at an issue price to be determined later.

“The placement shares will be issued based on a discount of not more than 10% to the five-day volume-weighted average market price (VWAP) of the shares up to and including the last trading day immediately preceding the price-fixing date, to be determined by the board after taking into consideration the prevailing market conditions.

“For illustrative purposes only, based on an illustrative issue price of 31.53 sen per placement share, the issue price of the placement shares would represent a discount of 9.99% to the five-day VWAP of the shares up to and including the LPD [last practicable date] of 35.03 sen,” said the group.

As the proceeds will mainly be used for the repayment of bank borrowings, Bintai Kinden said this will help to ease its cash flow by reducing the principal and interest servicing obligations as well as its gearing level.

The group added that this would enable it to quickly raise additional funds without having to incur interest costs or service principal repayments for bank borrowings, thereby allowing Bintai Kinden to preserve its cash flow.

“On the other hand, other fund-raising exercises such as a rights issue may not be suitable as it will involve a cash call from existing shareholders,” the group added.

Upon completion of the proposed private placement, the enlarged capital base is also expected to further strengthen the financial position of the company, it noted.

According to Bintai Kinden, the exercise is expected to be completed by the end of this year.

Bintai Kinden’s shares ended 1.5 sen or 4.41% lower at 32.5 sen, with a market capitalisation of RM180.37 million. The stock has plunged by 128% from its peak of 74 sen on Sept 28.