KUALA LUMPUR (June 14): Jentayu Sustainables Bhd (formerly known as Ipmuda Bhd) on Tuesday proposed a private placement to raise as much as RM47.07 million mainly towards financing the group's pre-development expenditures.

In a bourse filing, Jentayu Sustainables said the exercise entails the issuance of up to 142.63 million new shares representing not more than 30% of the total number of issued shares, and it is intended to be placed to third party investors to be identified at a later date.

For illustrative purposes, based on an indicative issue price of 33 sen per placement share, the exercise is expected to raise gross proceeds of up to RM47.07 million, of which up to RM31 million is to partially finance the pre-development expenditures for the hydroelectric plant projects.

Jentayu Sustainables had earlier announced that it intended to undertake two hydroelectric plant projects in Sabah — collectively known as Project Oriole.

The first is a run-of-river hydroelectric cascading scheme in Sungai Maligan, Sipitang, Sabah with an installed capacity of up to 31 megawatts (MW), while the second is another run-of-river hydroelectric cascading scheme in Ulu Padas, Sipitang, Sabah with an installed capacity of up to 129MW.

This came after the company announced on Dec 15 last year the receipts of the letters of approval from the Sabah state government for the Sungai Maligan project and the Sungai Padas project on Aug 12, 2021 and Sept 23, 2021 respectively.

Meanwhile, up to RM8 million from the private placement proceeds is earmarked for future viable investment in renewable energy projects, whereas up to RM5.67 million is allocated for working capital, RM1 million for the expansion of the healthcare division, while the remaining RM1.4 million is for the estimated expenses in relation to the proposed private placement.

Jentayu Sustainables noted the exercise would enable the group to raise funds expeditiously and cost effectively without having to incur interest expenses or service principal repayments compared to bank borrowings or issuances of debt instruments.

This is in addition to improving the liquidity and financial flexibility of the group by strengthening its financial position.

"Although the exercise is expected to result in dilution of the shareholdings of existing shareholders, the use of proceeds from the exercise for Jentayu Sustainables' businesses is expected to contribute positively to the future earnings of the group.

"Upon completion of the exercise, the enlarged capital base is also expected to strengthen the financial position of the group further," it said.

Jentayu Sustainables expects the proposed private placement to be completed by the fourth quarter of 2022.

Its share price ended 7.59% or three sen higher at 42.5 sen, bringing a market capitalisation of RM137.38 million.