This article first appeared in The Edge Financial Daily on May 9, 2019

KUALA LUMPUR: Gadang Holdings Bhd, whose share price has staged a strong rebound since the start of the year, is proposing a private placement to raise up to RM62.12 million.

In a filing with Bursa Malaysia yesterday, Gadang said it will issue up to 82.825 million new shares, representing not more than 10% of the enlarged issued shares of 828.257 million as at May 7.

It said the placement shares’ issue price will be determined and fixed by the board at a later date but explained that it will be priced at no more than 10% discount to the five-day volume weighted average market price (VWAP) of Gadang shares immediately before the price fixing date.

For illustrative purposes, the issue price of the placement shares is assumed at 75 sen, representing a discount of 8.99% to the five-day VWAP of Gadang shares as at May 7.

Based on the indicative price, the total proceeds from the private placement will be RM62.12 million, which Gadang said will be used for construction project expenditure, repayment of bank borrowings, as well as expenses related to the proposed private placement.

Gadang’s balance sheet as at Feb 28 showed that the company has a total borrowing of RM334.8 million, of which RM260.45 million is long-term liabilities, and cash balance of RM231.6 million.

The construction group noted that the proposed private placement is expected to be completed within six months from the date of approval from Bursa Malaysia, in which an application to the regulator will be submitted within the next two weeks.

TA Securities has been appointed as adviser and placement agent for the proposed private placement.