KUALA LUMPUR: Builder-cum-property developer WCT Holdings Bhd (fundamental: 0.6; valuation: 1.8) has proposed to undertake a rights issue of shares, on a one-for-10 basis, to raise RM107.61 million to RM143.23 million.

In a filing with Bursa Malaysia yesterday, WCT said the proposed renounceable rights issue comprises up to 143.23 million new shares of 50 sen each, on the basis of one rights share for every 10 existing WCT shares held.

The group said the entitlement date and issue price would be determined later.

Save for RM2 million of the proceeds set aside for the corporate exercise expenses, the rest will be mainly used for working capital, including repayment to suppliers and subcontractors.

WCT said the decision to undertake the rights issue is to raise funds without incurring interest expense compared with bank borrowings.

Moreover, the rights issue will improve its liquidity and financial flexibility by strengthening the financial position and reducing its current gearing level.

On top of the rights issue, WCT also proposed a bonus issue of up to 315.09 million new warrants on the basis of one free warrant for every five existing shares held.

According to WCT’s board of directors, this is the most appropriate avenue for them to reward the group’s existing shareholders.

Both the rights issue and bonus warrants are expected to be completed by the third quarter of 2015.

WCT’s counter fell 1.23% to close at RM1.60 yesterday, bringing its market capitalisation to RM1.72 billion.

This article first appeared in The Edge Financial Daily, on March 17, 2015.