Siab proposes private placement, rights issue, acquisition of Taghill

KUALA LUMPUR: Siab Holdings Bhd has proposed a private placement, a rights issue with warrants and the acquisition of 100 per cent in Taghill Projects Sdn Bhd.

The company said the private placement would involve100 million new ordinary shares representing 20.42 per cent of the existing issued shares to independent investor(s) to be identified, and at an issue price to be determined later.

The company said In a filing with Bursa Malaysia today that the issue price will be based on the five-day volume weighted average price (5D-VWAMP) of Siab shares immediately preceding the price fixing date(s) with a discount of not more than 20 per cent but subject to a minimum issue price of 12 sen per share.

It noted that based on the indicative placement price, the proposed private placement will raise gross proceeds of up to RM12 million, intended for the cash consideration for a proposed acquisition.

Siab has also proposed a renounceable rights issue of 766.52 million rights shares together with 383.26 million warrants on the basis of 13 rights shares for every 10 existing Siab shares held on the entitlement date together with one warrant for every two rights shares subscribed.

The company said issue price of the rights shares under the proposed rights issue with warrants has been fixed at 12 sen per rights share.

Siab said it also intends to acquire two million shares which is the entire stake in Taghill Projects Sdn Bhd, which is principally involved in the building construction services, from the vendors namely Chu Yee Hong, Wong Yih Ming And Yap Kek Siung for RM122 million.

The purchase consideration will be satisfied via a combination of RM96 million in cash and RM26 million through the issuance of 200 million new Siab shares at the issue price of 13 sen per share.

The company shared that the rationale for the proposed private placement and the proposed rights Issue with warrants will increase the number of Siab shares in circulation which may potentially enhance the liquidity and marketability of the company’s shares on the ACE Market.

“The proceeds to be raised from the exercise are intended to be utilised mainly for the funding of the proposed acquisition and the working capital of the group.

“The warrants attached to the rights shares are expected to enhance the attractiveness of the rights shares. The warrants will also provide the company with additional capital when they are exercised as well as allowing the company to raise fresh proceeds without incurring additional financing cost and minimise any potential cash outflow in respect of interest servicing,” it noted.

As for the proposed acquisition, Siab said it forms part of the group’s long-term business expansion and growth strategy as both companies are currently involved in the building construction services. Hence it will enable them to leverage on their combined strengths and expertise in the industry as well as respective business relationship with various industry stakeholders.

“The exercise also represents a strategic opportunity for the company to further strengthen its remaining order book to approximately RM1.89 billion, given that Siab’s and Taghill’s current unbilled order book stood at RM220.92 million and RM1.67 billion respectively,” it said.

Siab added that the profit guarantee has also been put in place to mitigate any potential losses or uncertainties associated with the proposed acquisition. – BK