KUALA LUMPUR (Jan 14): Jiankun International Bhd has proposed to undertake a private placement of up to 20% of the total number of issued shares in the company to raise an indicative maximum amount of RM23.03 million, which will partly fund the group’s planned land acquisition in Melaka and development costs of the tract.
In a Bursa Malaysia filing today, Jiankun said the development of the leasehold land at Pekan Klebang within Central Melaka District (Daerah Melaka Tengah) is expected to contribute positively to the earnings of the group.
"Based on the master development order dated 3 June 2015 issued by the Melaka Historic City Council to the vendor, the land was approved for the development of a hotel and service apartments. However, the said development order has lapsed on 2 June 2016.
"In this respect, the group intends to apply for a new development order in the name of its subsidiary, Key Success Development Sdn Bhd, upon completion of the proposed land acquisition, for the development of two blocks of 20-storey serviced apartments (comprising 288 units of 3-bedroom serviced apartments).
"As at the LPD (latest practicable date), the group does not have any fixed plans to commence the development of the hotel. Hence, the gross development value (GDV) and gross development costs (GDC) of the hotel cannot be determined at this juncture.
"The GDV and GDC of the serviced apartments are estimated to be RM127.53 million and RM83.69 million (excluding the land acquisition cost of RM13.00 million) respectively, and the development is expected to be completed in three years,” Jiankun said.
According to Jiankun, the issued share capital of the company comprises 168.17 million shares, hence, the group will be able to issue up to 48.49 million shares under the proposed private placement to third party investors and at an issue price to be determined later.
Based on an indicative issue price of 47.5 sen a share, Jiankun said the private placement will raise up to RM23.03 million.
"After due consideration of the various methods of fund raising, the board is of the opinion that the proposed private placement is the most appropriate avenue of fund raising at this juncture, as it would enable the group to raise additional funds expeditiously without having to incur interest costs or service principal repayments as compared to bank borrowings. In turn, this allows the company to preserve its cash flow,” the company said.
"Barring any unforeseen circumstances, the proposed private placement is expected to be completed by the second quarter of 2021. TA Securities Holdings Bhd has been appointed by the company to act as the principal adviser and the placement agent in relation to the proposed private placement,” Jiankun said.
At 5pm today, Jiankun’s share price finished one sen or 1.96% lower at 50 sen, which values the company at about RM84.09 million.
The stock saw 2.55 million shares traded.