KUALA LUMPUR (Jan 29): Tek Seng Holdings Bhd is proposing a private placement of up to 36 million shares to raise up to RM37.08 million, mainly for its capital expenditure.

In a filing with Bursa Malaysia today, the Penang-based polyvinyl chloride (PVC) product manufacturer said these new shares, which represent about 10% of its total issued and paid-up share capital, are meant to be issued to independent third party investors to be identified later.

It added that the placement shares will be priced at a discount of not more than 10% to the volume weighted average market price for five market days (5D-WAMP), immediately preceding the price fixing date.

Based on an indicative issue price of RM1.03 apiece, the group expects to raise gross proceeds of RM37.08 million.

According to the group, a total of RM21.08 million will be set aside for capital expenditure, which is to partially fund the ongoing construction of a new manufacturing plant (RM9.06 million) and the acquisition of two solar cell turnkey line machineries (RM12.02 million).

"We are in the midst of constructing a new three-storey manufacturing plant at the manufacturing premise located at Bukit Minyak Science Park in Penang to accommodate additional turnkey line machineries for the manufacturing of its photovoltaic products.

"The total construction cost for the said plant is approximately RM46 million. As such, the group intends to utilise part of the proceeds to part-finance the ongoing construction, which includes, amongst others, building construction works and installation of rooftop solar system," it added.

Currently, Tek Seng has four production lines for solar cell products, with a total capacity of 280 megawatt (MW).

"As part of its overall expansion plan to have nine (9) production lines that can achieve a total production capacity of 700 MW by 2016, we intend to utilise part of the proceeds to part-finance the acquisition cost of two additional solar cell turnkey line machineries, carrying a combined production capacity of 140 MW.

"The remaining three additional turnkey line machineries with a combined production capacity of 280 MW shall be acquired using internally-generated fund," it added.

Tek Seng also allocated RM8 million for working capital and RM7 million to repay bank borrowings, while the remainder of RM1 million has been allocated for expenses.

The group expects the private placement to be completed by first quarter of 2016.

Shares in Tek Seng fell one sen or 0.93% to close at RM2.51 today, bringing it a market capitalisation of RM288.87 million.

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