KUALA LUMPUR (April 7): Sarawak Consolidated Industries Bhd (SCIB) is proposing to undertake a private placement to raise RM66.52 million to fund the company’s upcoming construction projects.

It is also proposing a recurrent related party transaction of a revenue and trading nature between SCIB and Serba Dinamik Holdings Bhd to the tune of RM1.37 billion.

In a filing today, SCIB said it expects to secure several projects from Serba Dinamik for the provision of construction and project management services, and the supply of precast products and construction materials for overseas and local projects.

SCIB and Serba Dinamik share a major shareholder in common, Datuk Mohd Abdul Karim Abdullah, who holds a substantial stake in both companies. Mohd Abdul Karim is currently the non-independent non-executive chairman of SCIB with an approximately 47.5% stake in the company. He is also group managing director and chief executive officer of Serba Dinamik with a 21.5% equity stake.

“Pursuant to the above, the awards of the projects, which are forthcoming, [are] considered as related party transactions that are recurrent of a revenue or trading nature and is in the ordinary course of day-to-day operations of SCIB,” the group said.

The proposed private placement, which it said will help fund SCIB’s working capital for current and future projects, will involve an issuance of up to 36.75 million new shares, representing 30% of SCIB’s enlarged total number of issued shares.

The placement will be implemented in tranches within six months from approval, with the issue price to be determined by the board at a later date, it added.

“For illustrative purpose only, the indicative issue price of the placement shares is assumed at RM1.810 per placement share, which represents a discount of approximately 9.89% to the five-day volume weighted average price (VWAP) of SCIB shares up to and including the last practical date of RM2.0086 per SCIB share,” it said.

SCIB said the acceptance of projects to be awarded by Serba Dinamik is expected to increase the order book and earnings of the construction and manufacturing business segments of the group.

The group's orderbook currently stands at RM1.09 billion, of which approximately 95.6% is contributed by its construction segment.

Additionally, the acceptance of these projects and the award of future projects on recurrent basis would also enable the group to gradually expand its geographical presence to other regions, for instance the Middle East region, it said.

The private placement is expected to be completed by the fourth quarter of 2020, it said.

At the noon market break, SCIB shares were five sen or 2.28% lower at RM2.14, for a market capitalisation of RM183.79 million.