KUALA LUMPUR: Timber-based Leweko Resources Bhd’s renounceable rights issue, which is priced at above market value, is substantially undersubscribed. 

The rights issue of 161.17 million shares with detachable warrants was fixed at 20 sen per share with free warrants, compared with yesterday’s closing of 11.5 sen.  

In a filing with Bursa Malaysia, Leweko said up until Sept 2 the company received valid acceptances and excess applications for a total of 80.15 million shares, representing 49.73% of the total number of available shares under the rights issue with warrants. The company’s share price closed at 14 sen on Sept 2. 

Leweko said the rights shares and warrants are expected to be listed on Bursa Malaysia next Tuesday.

Leweko had proposed the rights issue to partly finance the joint venture (JV) between its subsidiary, Maju Weko Timber Industries Sdn Bhd and Kampung Kenayat Sdn Bhd to develop 38 parcels of land in Perak.

It was previously announced that the parties were to develop a mixed-use development on the land, with a gross development value of RM350 million.

The JV signalled Leweko’s venture into the property development segment, as the company aims to diversify its earnings base and reduce its dependency on the trading of logs and manufacturing of precast concrete products.

This article first appeared in digitaledge Daily, on September 8, 2015.