KUALA LUMPUR (Dec 17): Green Packet Bhd is planning to place out up to 40% of its issued shares to raise as much as RM42.99 million to fund its cloud computing solutions business. This is the group's third placement in less than one and half years.

The latest proposed placement will entail the issuance of up to 716.41 million shares to third party investors to be identified, said the technology, media and telecommunications player in a filing with Bursa Malaysia on Friday (Dec 17).

While the issue price for the placement shares have yet to be fixed, the expected proceeds to be raised is based on an indicative price of 6 sen per placement share, which is a discount of about 18.48% to the five-day volume-weighted average price of Green Packet shares up to Dec 16 of 7.36 sen.

Green Packet said the placement shares will be priced at a discount of not more than 20% of the 5D-VWAP of the shares immediately before the price-fixing date.

It expects to allocate RM20 million from the maximum proceeds raised to partially fund the construction of a hyperscale data centre that will provide space for cloud service providers to house their servers or infrastructure, with the remainder of the proceeds to be used as working capital for the cloud-computing business and the purchase of hardware/equipment.

The group has identified a piece of leasehold land situated in the southern region of Malaysia to construct the HDC and has commenced preliminary negotiation with the land owner. Subject to the success of the negotiation and subsequently, the approval for the development order, as well as the building plans from the relevant authorities, the group intends to commence the construction in the 2nd half of 2022.

The total estimated cost for the HDC is RM410 million and it is expected to be completed within two years. The group intends to fund the balance of the capital expenditure via a combination of debt and/or equity fund raising exercises at a later stage, said Green Packet.

The group completed two previous placements this year. The first, proposed on Aug 12, 2020, was completed on March 29 this year, with RM51.6 million raised — the bulk for working capital, with about 24% of that used for its cloud computing business.

The second — proposed in July this year after Green Packet called off its planned three-for-five rights issue to raise RM328.37 million, citing prevailing market conditions and its volatile share price — was completed just two months ago on Oct 13, with RM20.98 million raised that it used mainly for working capital.

Green Packet’s shares slipped half a sen or 6.25% to close at 7.5 sen on Friday, translating into a market capitalisation of RM105.24 million. The counter has dropped 82% year-to-date.