KUALA LUMPUR: Express delivery service firm GD Express Carrier Bhd (GDex) has proposed to undertake a private placement of up to 10% of its issued share capital to raise up to RM227.12 million at an illustrative issue price of RM1.58 per placement share.

In a filing with Bursa Malaysia yesterday, GDex said the proceeds from the private placement will be used for working capital (RM65 million), capital expenditure (capex) and business development (RM161.42 million) and estimated expenses in relation to the proposed exercise (RM700,000).

“After due consideration of the various methods of fundraising, the board is of the view that the proposed private placement is the most appropriate avenue of fundraising at this juncture, as it enables the company to raise funds expeditiously without incurring interest cost compared to bank borrowings,” said GDex.

Prior to the proposed private placement, GDex had proposed to undertake a 3-for-1 bonus issue, a 5-for-1 warrants issue as well as a dividend reinvestment plan (DRP) on its final dividend of 1.125 sen per share.

“Assuming all the warrants-A are exercised, the entire bonus shares issued, all the warrants-B exercised and the entire DRP is undertaken, the proposed private placement will entail the issuance of up to 143.74 million placement shares, representing 10% of the enlarged issued share capital of GDex.

The issue price of the placement shares will be fixed by the board at a later date after obtaining the necessary approvals.

The issue price will not be priced at more than 10% discount to the five-day volume-weighted average market price of GDex shares immediately before the price-fixing date.

“The proposed private placement is not expected to have a material effect on the earnings of the GDex group for the financial year ending June 30, 2015 as the proceeds to be raised are expected to be used within 12 to 24 months from the date of listing of the placement shares.

“However, it is expected to contribute positively to the future earnings of the group when the benefits of the utilisation of proceeds are realised,” it added.

After the proposed private placement, its gearing ratio as at June 30, 2014 will fall from 0.27 times to 0.09 times.

The proposed private placement is subject to the approval of regulatory authorities, and applications to the relevant authorities are expected to be submitted within one month from yesterday.

GDex shares closed six sen or 2.93% higher to RM2.11 yesterday, giving it a market capitalisation of RM1.89 billion.

This article first appeared in The Edge Financial Daily, on January 9, 2015.