KUALA LUMPUR (April 19): KNM Group Bhd has proposed to raise up to RM36.36 million via a private placement to third party investors to be identified later, to finance its ethanol plant in Chachoengsao, Thailand and for operating expenses.

In a filing with the stock exchange today, KNM said the proposed placement entails the issuance of up to 234.61 million new shares, representing 10% of the total number of its issued shares.

As at April 16, KNM has an issued capital of RM1.88 billion comprising 2.35 billion KNM shares, 161.58 million outstanding warrants-B and 91.17 million outstanding employees’ share option scheme.

Assuming the placement shares are issued at an indicative issue price of 15.5 sen per placement share, a 9.2% discount to the five-day volume-weighted average market price of 17.07 sen per KNM share up to April 17, the proposed exercise is expected to raise gross proceeds of RM36.36 million.

Of this, RM15.36 million has been earmarked to finance its ethanol plant and operating expenses, RM10 million to purchase of raw materials and operating overheads for the operations of the ethanol plant and another RM10 million as capital expenditure for future expansion of production capacity of ethanol at the plant.

"The proposed private placement is expected to contribute positively to the group's earnings for the financial year ending Dec 31, 2019 and for the future years as and when the benefits of the utilisation of proceeds are realised," said KNM.

The proposed exercise is expected to be completed by the second quarter of this year.

M&A Securities is the adviser and placement agent for the proposed private placement. 

KNM shares closed down 0.5 sen or 3.03% at 16 sen today, with 39.92 million shares done, bringing a market capitalisation of RM379.11 million.