KUALA LUMPUR: With improving market and economic sentiment as well as share prices advancing since the start of the year, more companies are taking the opportunity to raise funds via placements or cash calls from shareholders.

Yesterday, three companies — AE Multi Holdings Bhd (AEM), Cocoaland Holdings Bhd and KSL Holdings Bhd — proposed to raise funds for additional working capital and strengthen their balance sheets via private placement of up to 10% of their existing paid-up capital, while MK Land Holdings Bhd is undertaking a rights issue.

In a statement yesterday, MK Land Holdings Bhd announced that its board had decided to undertake a rights issue of equity-linked instruments to raise gross proceeds of at least RM150 million for partial repayment of bank borrowings and for working capital.

It said a detailed announcement would be made at a later date after the terms of the rights issue had been finalised. MK Land rose 0.5 sen to 43 sen yesterday, with over six million shares done. Its 52-week high of 47.5 sen was posted on June 15, 2009.

KSL Holdings Bhd is proposing a placement of up to 35.54 million new shares of 50 sen each to yet-to-be identified investors by RHB Investment Bank as the placement agent.

The discount too will be not more than 10% of the volume weighted average market (VWAM) price or lower than its par value. It said the indicative issue price would be RM1.09 based on a discount of about 10% to the five-day VWAM price up to Jan 11, 2010 of RM1.21. On the indicative price, it would raise about RM38.74 million.

KSL expects to complete the exercise by the first quarter of the year. Although its share price has risen over the past few trading days, it is still off its 52-week high of RM1.37 on Oct 27, 2009. It closed one sen higher at RM1.25 yesterday, with 130,300 shares done.

AEM said its proposed placement of up to 8.45 million shares of 50 sen each would be priced at 50.5 sen, representing a discount of about 9.8% to the five-day VWAM price from Jan 7 to 13, 2010 of about 56 sen.

The exercise, which could be completed by the first quarter, will raise up to 4.27 million. MIMB Investment Bank Bhd is the adviser and placement agent. AEM said net gearing was expected to decline to 1.08 times from 1.24 times, assuming the entire proposed issue of new shares was placed out.

AEM also rose to its 52-week high at the close to RM1.06, up 30 sen, with more than 24 million shares traded.

Cocoaland’s proposed placement of 12 million shares of 50 sen each to yet-to-be-identified third-party investors has yet to be priced, but it would not be at more than 10% discount to the five-day VWAM price and not lower than its share par value.

Assuming a discount of 10% to the VWAM price from Jan 7 to 13, 2004 of RM1.404, the issue price would be RM1.264 per share, raising gross proceeds of about RM15.2 million. Its gearing will be maintained at 0.01 times after the exercise, which is expected to be completed within the second quarter.

TA Securities Holdings Bhd is the adviser and placement agent.

The stock rose to its 52-week intra-day high of RM1.52 yesterday. It gained seven sen to close at RM1.51, with over two million shares done.


This article appeared in The Edge Financial Daily, January 15, 2010.