KUALA LUMPUR (July 28): Dagang NeXchange Bhd (DNeX) has proposed a private placement to raise up to RM109.14 million to invest in new businesses, repay bank borrowings and use for working capital. 

The actual number of shares to be issued will depend on the group's total number of issued shares on a date to be determined later, the group said in a filing today. 

"Assuming all the convertible securities are fully converted into new DNeX shares prior to the implementation of the proposed private placement, the company's enlarged number of issued shares will be 2.48 billion DNeX shares.

“Accordingly, a total of up to 496.08 million new DNeX shares, representing approximately 20% of the enlarged number of issued shares of DNeX, may be issued pursuant to the proposed private placement," it added.   

DNeX said the placement shares will be issued to third-party investors who will be identified later, while the issue price of the shares will also be determined later. 

The issue price, it added, will not be priced at a more than 10% discount to the five-day volume-weighted average market price (VWAP) of DNeX shares immediately before the price-fixing date. 

For illustration purposes, based on the issue price of 22 sen per share, the placement share could raise up to RM109.14 million, the group said. 

DNeX said from the proceeds of the placement, RM84.04 million, has been earmarked for investment into new potential businesses, RM20 million to repay partial bank borrowings and RM5 million for working capital.  

On the potential businesses, acting group managing director Mohd Azhar Mohd Yusof said: “We believe there are sound opportunities where we can tap to put us back on the growth path. Especially under current market conditions, valuations of certain IT and energy assets have become attractive for the group to consider investing in.” 

“However, we will be very selective and prudent in making investment decisions, so as to ensure the preservation and growth of shareholder value,” he said in a separate statement. 

“The corporate exercise will build up the group’s war chest and strengthen our capabilities to develop new sustainable revenue lines, as part of our plan to chart the next growth phase for the group,” he added.

As at March 31, 2020, DneX's total borrowings amounted to RM97.59 million. As such, the RM20 million repayment of borrowings should result in annual gross interest savings of RM1.02 million. 

The group expects the private placement to be completed by the fourth quarter this year.  

The share price of DNeX closed half a sen or 1.82% lower at 27 sen, valuing the group at RM474.68 million. Some 60.49 million shares were traded. 

The stock has jumped by more than three times from its recent low of eight sen in March.