KUALA LUMPUR (Sept 9): Privasia Technology Bhd plans to raise RM6.14 million through a private placement to repay borrowings and for working capital. This is assuming an issue price of 11 sen per placement share.

In a bourse filing today, Privasia said the proposed private placement entails the issuance of up to 55.82 million placement shares, representing 10% of the total number of issued shares of the company, at an issue price to be determined later.

Out of the RM6.14 million gross proceeds, the group plans to utilise RM3.12 million of the proceeds to repay bank borrowings, which is expected to result in RM160,000 per year in gross interest savings. As at end-June, Privasia's borrowings totalled RM19.29 million while its cash and short-term deposits amounted to RM9.71 million.

Another RM2.91 million of the proceeds will be used for working capital including payment of administrative and operating expenses, as well as payment to suppliers. The rest will be used to pay expenses in relation to the proposed exercise.

"The board is of the view that the proposed private placement is an interim measure to address its immediate working capital requirements. As digitisation has shown to be significant in business continuity, the group has identified opportunities for companies to adopt digitalisation which include business automation and cloud management services," said Privasia.

"Payment of administrative and operating expenses, as well as payment to the group’s suppliers and/or creditors will allow the group to have the required financial resources to continue to carry out its operations including tendering for any upcoming projects," it added.

Alliance Investment Bank Bhd is the adviser and placement agent for the proposed exercise, which is expected to be completed by the fourth quarter of this year.

Privasia shares closed up 2 sen or 19.05% at 12.5 sen today, with 15.2 million shares done. Its market capitalisation stood at RM69.78 million.