KUALA LUMPUR (Aug 10): Utusan Melayu (Malaysia) Bhd announced today that it has defaulted in its principal payment to Bank Muamalat Malaysia Bhd and Maybank Islamic Bhd due to financial constraints.
The newspaper publisher said the facility with Bank Muamalat is a revolving finance totalling up to RM530,121, while the facility with Maybank is a bankers acceptance worth RM654,750.
Following this, Utusan intends to submit a proposal to restructure the loan facilities with the banks.
In the meantime, it is working towards restructuring all its loan facilities in line with its business transformation plan, the group added in a filing with Bursa Malaysia.
Utusan said the default in payment will not have any significant impact on the business, financial situation and operations of the group's remaining business.
"Nevertheless, the group shall endeavour to continue its other remaining business operations notwithstanding the default and will engage with the lenders and suppliers for their continuous support," it said.
In a separate filing, Utusan today proposed to undertake a private placement of up to 10% of its issued shares, to raise gross proceeds of RM2.1 million.
Utusan said up to 11.07 million new shares, representing 10% of the 110.73 million issued shares, may be issued for the private placement.
It said the issue price of the placement shares will not be more than 10% discount to the five-day volume weighted average market price (VWAMP) of Utusan shares immediately preceding the price-fixing date.
Assuming that the indicative issue price is 19 sen, which represents a discount of 9.52% to the five-day VWAMP of 21 sen, the private placement is expected to raise RM2.1 million.
Utusan said the proceeds are intended to be used by the group to repay bank borrowings and expenses in relation to the proposed private placement.
The board of directors are of the opinion that the private placement is the most appropriate avenue of fund raising as it enables the group to raise additional funds to repay the bank borrowings which would allow for yearly interest cost savings of up to RM108,213.
Besides that, it said the private placement provides the group an expeditious way of raising funds from the capital market as opposed to other forms of fund raising, and that it will increase the size and strength of the company's shareholders' funds.
Barring any unforeseen circumstances and subject to all relevant approvals being obtained, Utusan expects the proposed private placement to be completed by the third quarter of 2018.
Utusan shares did not see any trading today. They last changed hands at 20 sen on Wednesday, giving a market capitalisation of RM22.7 million.