KUALA LUMPUR (Feb 16): Pestech International Bhd (Pestech) has proposed a second private placement of up to 9.7 million new shares, representing about 5.7%  of its existing issued and paid-up share capital, to raise some RM36.9 million.

This is the second share placement for Pestech in less than one year.

In a filing with Bursa Malaysia, Pestech (fundamental: 0.9; valuation: 0.3) noted that under the second proposal, the price of the placement shares will be determined at a certain date to be announced later.
 
However, based on the indicative issue price of RM3.81 per placement share, the company aims to raise RM36.9 million for working capital.

The company noted the shares may be issued based on a discount of not more than 10% to the five-day volume weighted average market price of Pestech shares, immediately preceding the price-fixing date.

“In any event, the issue price of the placement shares shall not be lower than the par value of Pestech shares of 50 sen each,” the proposal read.

“The placement shares will be placed out to third party investor(s) to be identified at a later stage, where such investor(s) shall be person(s) who or which qualify under Schedule 6 and 7 of the Capital Markets and Services Act, 2007.”

The company noted the second proposal provides an avenue to raise funds without incurring interest cost, as compared to bank borrowings and reduce the gearing of the Pestech Group.

The company also noted upon completion of the second proposal, the enlarged capital base is expected to strengthen Pestech’s financial position and enhance the liquidity and marketability of its shares on the local bourse.

The second proposal will result in an enlarged issued and paid-up share capital of 184.08 million shares in the company, worth RM92.04 million.

On Oct 8, 2014, Bursa Malaysia had already approved the company’s first proposal to list up to 7.3 million new Pestech shares, representing up to approximately 4.39% of the then-issued and paid-up share capital of the company.

This had followed the resolution reached at the company’s annual general meeting, whereby the proposal to issue new ordinary shares of 50 sen each in Pestech, not exceeding 10% of the issued and paid-up share capital was approved.

As of last Friday (Feb 13), a remaining 1.8 million Pestech shares are pending to be placed out for the first share placement.

Pestech share price gained seven sen or 1.65% to RM4.32 today, with 231,700 shares traded, bringing its market capitalisation to RM734.73 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.)