KUALA LUMPUR (March 23): CAB Cakaran Corp Bhd has obtained the approval from its shareholders at its extraordinary general meeting (EGM) today for its proposed private placement to Plant Wealth Holdings Ltd.

The private placement, which is expected to raise total proceeds of RM31.18 million, involves the issuance of some 15.06 million new shares, representing a 9.85% equity stake, at an issue price of RM2.07 per share.

The group said RM10 million from its total proceeds will be utilised for the repayment of bank borrowings, which will reduce its gearing level to 0.74 times, from 1.05 times.

Meanwhile, RM20.78 million of the proceeds will be used for working capital purposes, while the balance will be used to cover expenses arising from the placement exercise.

“We welcome our new substantial shareholder in CAB Cakaran. Both the existing shareholders and management team of CAB Cakaran are confident that this strategic move will accelerate the company’s sales and profitability to benefit all parties,” said group managing director Chuah Hoon Phong in a statement today.

He added that the group will leverage on its new shareholder’s market presence in Indonesia, to widen its regional footprint.

Plant Wealth is controlled by KMP Investments Pte Ltd, a subsidiary of KMP Private Ltd, which is owned by Indonesian tycoon and Salim Group President, Anthoni Salim. The Salim Group is one of the biggest conglomerates in Indonesia.

As at March 9, 2016, Anthoni Salim has indirect interest of 12.454% in CAB Cakaran via Plant Wealth.

On Dec 7, 2015, the group had inked a memorandum of understanding with KMP Private Ltd to establish an integrated poultry business in Indonesia, via a joint venture (JV) company between a special purpose vehicle of Salim Group and CAB Cakaran.

The vehicle will hold a 90% stake in the JV company, while CAB Cakaran will own the remaining 10%, with the option to increase its shareholding up to 30% within a three-year period.

CAB Cakaran shares fell 2 sen or 1.21% to close at RM1.63 today, giving it a market capitalisation of RM251.37 million.