In the past year, countless companies have proposed private placement exercises to raise funds in view of ample market liquidity. It is a way to rope in strategic investors by placing out company shares.
The recent rejection of M3 Technologies (Asia) Bhd’s private placement is rather unusual, as such a resolution is often easily passed.
A total of 11 shareholders voted at its extraordinary general meeting, with seven controlling 146.1 million shares or a 65.67% interest opposing the resolution. The placement was expected to raise up to RM9.82 million, of which RM4.7 million was intended for the enhancement of its i3TeamWorks, development of i3Desktop and marketing; while another RM4.54 million was for working capital.
This was not M3’s first attempt at a private placement in recent years, as it had already placed out 128.54 million shares, or 20% of its share base, in January this year.
A day after the setback, the mobile solutions provider announced that its memorandum of collaboration with AT Systematization Bhd had been aborted. The deal was to provide digital signage hardware and software enhancements for large-scale Covid-19 disinfection chambers.
Does the failed fundraising exercise, which was proposed on March 15, indicate that there is more to it than meets the eye? Are there differences between the major shareholders of the company that resulted in the resolution not being passed?
On Feb 24, Lim Seng Boon, who owns a 7.4% stake, stepped down as the company’s director, after relinquishing the managing director post on Feb 11, citing retirement. Nicholas Wong Yew Khid was then redesignated as executive director from non-independent director on March 1.
Also sitting on M3’s board is Datuk Eddie Chai Woon Chet, a prominent businessman and investor who has had a presence in a slew of penny stocks on Bursa Malaysia.
XOX Bhd and DGB Asia Bhd are among the largest shareholders of M3 with 9.39% and 3.32% stakes respectively. Worth noting is that both XOX and DGB Asia own shares in various companies that are linked via shareholding and directorship.
M3 has been in the red over the past eight financial years, which may cast significant doubt over its ability to do another private placement, more so when its share price has been trading below 10 sen since mid-November last year.