Friday 29 Mar 2024
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KUALA LUMPUR (Nov 27): Mega First Corp Bhd plans to undertake a renounceable rights issue of new shares with free warrants — at an entitlement date to be announced later, to raise up to RM250 million to part finance its construction of the Don Sahong hydropower project in Laos. 

The entitlement basis, date, issue price and number of shares to be issued for the cash call will be fixed and announced later, said Mega First via its filing on Bursa Malaysia yesterday.

Up to 60% or RM150 million of the gross proceeds of the exercise could be used for the hydrpower project. Of the remainder, Mega First intends to utilise up to RM65 million to repay short-term borrowings to improve its gearing level and strengthen its financial position. 

As at Nov 20, the total cost for the hydropower project is estimated to be US$500 million (about RM2.1 billion), which is expected to be financed by new equity, debt, and internally-generated funds, said Mega First.

The development and implementation of the project will be undertaken by Don Sahong Power Company Ltd, an 80%-owned indirect subsidiary of Mega First. Construction of the project has started and is expected to be completed in about four to four and a half years. It is targeted to kick off commercial operation in early 2020.

The intended gross proceeds have been determined up front to provide clarity to shareholders with respect to the estimated capital outlay required to fully subscribe for their respective entitlements under the rights issue with warrants, which can be approximated by multiplying the intended gross proceeds with their respective percentage shareholders in Mega First," it said.

In order to match the risk profiles and USD funding requirements of the project, shareholdres of Mega First will be given the option to subscribe to the rights issue with warrants either solely in ringgit or US dollar.

It also noted that Bank Negara Malaysia (BNM) had, on Oct 22, given its conditional approval for the subscription option and the investment abroad by Mega First in relation to the Don Sahong project, with the condition that “only resident shareholders with existing US dollar funds are allowed to subscribe for the rights shares in US dollar and any conversion of ringgit to US dollar for the purposes of subscribing for the rights shares is not allowed”.

The group is also seeking a proposed exemption for Mega First executive chairman Goh Nan Kioh and parties acting in concert [PACs] with him, who collectively control 32.86% of Mega First, from being obligated to undertake a mandatory take-over offer for all Mega First shares and warrants not held by them.

This is because their shareholdings may increase to more than 33% upon exercise of the group’s employees share option scheme.

In the event the proposed exemptions are not approved by its shareholders and the Securities Commission, the proposed rights issue with warrants will not be implemented.

Mega First shares closed up 2 sen or 0.81% to RM2.50 yesterday, giving it a market capitalisation of RM557.12 million.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

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