KUALA LUMPUR (Oct 5): LFE Corp Bhd is planning to raise up to RM39.25 million — equivalent to 87% of its market capitalisation of RM44.88 million — through a rights issue, mainly to fund its 51% stake acquisition in Cosmo Property Management Sdn Bhd (CPMSB) and for working capital. 
 
In a filing with Bursa Malaysia, LFE said the right issue involves up to 490.57 million shares on the basis of two shares for every one existing share held at an entitlement date to be announced later. 
 
The issue price for the right shares has been fixed at eight sen apiece, which represents a discount of 31.62% to its theoretical ex-rights price of 11.7 sen computed based on its five-day volume-weighted average market price (VWAMP) of its shares price of 19.1 sen on the latest practical date.  

The group expects the exercise to raise between RM10.59 million (minimum scenario) and RM39.25 million (maximum scenario). 
 
Under the maximum scenario, the group will utilise RM18.33 million to partly fund the acquisition of CPMSB, and RM20.22 million for working capital. 

LFE said the RM20.99 million of the RM27.54 million purchase consideration for the 51% stake in CPMSB will be satisfied in cash, and the remaining RM6.55 million via the issuance of 65.55 million new LFE shares at 10 sen a share.  

LFE, which is principally involved in the provision of construction services, said the acquisition will provide synergies for the group and expand its business operations in the construction industry.  
 
CPMSB is mainly involved in the provision of civil and structural works and mechanical and electrical works.   

The vendor, Resolute Accomplishment Sdn Bhd, had guaranteed a net profit of RM12 million to LFE for two financial years.   

As at the latest practicable date of this announcement, CPMSB’s outstanding order book stood at RM145 million from its two ongoing construction projects, which will provide earnings visibility for the next 24 months.  

Barring any unforeseen circumstances and subject to all relevant approvals being obtained, LFE said the proposals are expected to be completed by the first quarter of 2021.  
 
LFE’s share price closed 0.5 sen or 2.56% higher at 20 sen today, with 143,200 shares traded.