KUALA LUMPUR (May 10): Khee San Bhd has proposed to raise up to RM4.78 million via a private placement to third-party investors to be identified later.
In a filing with Bursa Malaysia today, the manufacturer of sweets and confectionery products said the proposed private placement entails the issuance of up to 10.4 million new shares, representing not more than 10% of its total issued shares.
As at May 8, Khee San has 104 million issued shares and 14.74 million options under the employees’ share option scheme.
Subject to market conditions and the timing of identification of placees, Khee San said the proposed private placement may be implemented in one or more tranches within six months from the date of the approval from Bursa Securities.
"The implementation of the placement arrangement in multiple tranches would provide flexibility to the company to procure interested investors to subscribe for the placement shares," it said, adding that the issue price for each tranche of the placement shares may be determined separately if issued in multiple tranches.
Assuming the placement shares are issued at an indicative issue price of 46 sen per placement share, which is a discount of 4.25 sen or 8.46% to the 5-day volume weighted average price of Khee San shares as at May 8, the proposed exercise is expected to raise up to RM4.78 million.
Of this, RM2.5 million has been earmarked for purchase of raw material, RM2.1 million for working capital and the remaining RM180,000 for expenses in relation to the proposed exercise.
"The group’s average monthly purchase of sugar (which is a core raw material for the production of the group’s products) was RM1.1 million per month for the past 12 months up to April 30, 2019," said Khee San.
As at Dec 31, 2018, the group’s trade payables and total borrowings stood at RM14.11 million and RM84.35 million, respectively, while its cash and bank balances were at RM19.01 million.
"The proposed private placement is not expected to have any immediate material effect on the group's earnings for the financial year ending Dec 31, 2019 as it is expected to be completed in the second half of this year while the proceeds to be raised are expected to be utilised within three months from the date of listing of the placement shares," said Khee San.
TA Securities Holdings Bhd has been appointed as the adviser and placement agent in relation to the proposed exercise.
Khee San shares closed up one sen or 2.06% at 49.5 sen today, with 57,000 shares done, bringing a market capitalisation of RM51.48 million.