Magma Group proposes to undertake RCN issuance to raise up to RM100mil

KUALA LUMPUR: Magma Group Bhd has proposed to undertake the issuance of redeemable convertible notes (RCN) with an aggregate principal amount of up to RM100 million.

The group today entered into a conditional subscription agreement with Advance Opportunities Fund VCC and Advance Opportunities Fund 1 (collectively, subscribers) to undertake the proposed notes.

In a filing with Bursa Malaysia, Magma said the notes would mature on the date falling 36 months from the closing date of the first sub-tranche of the Tranche 1 Notes (proposed notes issue).

The proposed notes issue would be issued in three tranches, subject to the terms and conditions as set out in the subscription agreement.

The proposed notes issue is expected to raise RM30 million through the issuance of Tranche 1 Notes.

An amount of up to RM70 million may be raised through the issuance of Tranche 2 Notes and Tranche 3 Notes, comprising RM2.5 million for each sub-tranche, at the company’s discretion.

The proposed notes issue of RM100 million would be utilised for funding requirements, namely repayment of existing financing facilities, working capital and expenses relating to the proposed notes issue.

“This is especially since the company was not able to proceed with the further drawdown of the previous RCN as it has almost exhausted the approved maximum shares to be issued under the previous RCN,” it said.

The proposed notes issue is not expected to have a material effect on the earnings of the group for the financial year ending Dec 31, 2024.

Barring any unforeseen circumstances and subject to all requisite approvals being obtained, the first sub-tranche of Tranche 1 Notes should be available for issuance by the fourth quarter of 2024 and the proposed notes issue is expected to be fully issued within three years from issuance of the first sub-tranche of Tranche 1 Notes.

On prospects, Magma remained committed to leveraging the strengths of its hotel operation and management segments while addressing the challenges within the property development sector, with an eye towards sustainable growth and stakeholder value enhancement in the evolving market landscape. – BK