KUALA LUMPUR (May 15): Zecon Bhd has proposed to raise up to RM3.28 million via a private placement of up to 10% of its total issued shares to third party investor(s) to be identified later.

The engineering and construction firm said the proposed private placement enables it to raise additional funds without incurring interest costs and provides an expeditious way of raising funds from the capital market.

In a filing with Bursa Malaysia today, Zecon said the proposed private placement entails the issuance of up to 13.1 million new shares, representing not more than 10% of its total issued shares. As at May 8, the total issued shares of Zecon stood at RM128.97 million comprising 131.02 million shares.

Assuming the placement shares are issued at an indicative issue price of 25 sen per placement share, which represents a discount of 9.62% to the five-day volume weighted average market price of Zecon shares of 27.66 sen apiece up to May 8, the proposed exercise is expected to raise up to RM3.28 million.

Of this, RM3.2 million or 97.6% has been earmarked for working capital and the remaining RM80,000 or 2.4% for expenses in relation to the proposed exercise.

The proposed private placement will also increase the size of Zecon's shareholders' funds to RM281.97 million post-exercise from RM285.16 million as at June 30, 2018.

"The proposed private placement, which is expected to be completed by the third quarter of 2019, will not have any material effect on the earnings of Zecon Group for the financial year ending June 30, 2019," said Zecon.

UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the adviser and the placement agent for the exercise.

Zecon shares closed up 0.5 sen or 1.96% at 26 sen today, with 559,000 shares done, bringing a market capitalisation of RM34.06 million.