KUALA LUMPUR (Aug 6): Key Alliance Group Bhd (KAG) plans to raise some RM5 million through a renounceable rights issue with warrants to fund the diversified firm's foray into the medical equipment business.

The group has proposed a renounceable rights issue of up to 982.21 million shares in KAG, on the basis of one rights share for every one ordinary share held by entitled shareholders, it said in a filing with Bursa Malaysia today.

The rights issue comes with up to 982.21 million free detachable warrants in KAG, on the basis of one warrant for every one rights share subscribed for on an entitlement date to be determined and announced later, it noted.

"The proposed rights issue with warrants will be undertaken on a minimum subscription level basis, after taking into consideration the minimum level of funds the company intends to raise from the exercise amounting to RM5 million.

"[A] substantial portion of the proceeds raised from the proposed rights issue with warrants is intended to be utilised for the business expansion in relation to the proposed diversification, repayment of bank borrowings and working capital requirements of the group," it added.

For illustrative purposes, the indicative issue price of the rights shares was quoted at six sen apiece, representing a discount of up to 31% based on the five-day, one-month, three-month, six-month and 12-month volume weighted average prices (VWAPs) of KAG shares up to yesterday.

The indicative exercise warrant, on the other hand, was quoted at 10 sen per unit, representing a premium of 14.94% based on the five-day VWAP of KAG shares up to yesterday, it noted.

Meanwhile, the group said it intends to diversify its principal activities to include the marketing, distribution and trading of medical equipment, devices, and related products and accessories.

"[These include] medical test kit, home health testing kit or monitoring device, electro-medical equipment, cardiovascular, orthopaedic and in vitro devices, diagnostic and wound care management products, aesthetic equipment as well as personal protective equipment including face masks and gloves, and other medical instruments, apparatus and appliances," it said.

Going forward, the group hopes to leverage its existing information technology-related services business, specifically its cloud computing and big data technologies, to enhance and complement the medical equipment segment by creating a digital platform for the business.

"The digital platform not only serves to widen the reach of its customer base through e-commerce channel for medical devices and equipment, but also captures and integrates data, facilitates the connectivity of medical devices and generates insights to improve medical devices, operational efficiency and healthcare outcomes.

"The integration of big data analytics in medical equipment trading segment allows the group to reap business synergy by potentially generating further business opportunities, whilst improving its business process and reducing system costs," it said.

Shares in KAG settled unchanged at 12 sen apiece with 84.36 million units done. The firm's market capitalisation stood at RM115.16 million.