MRCB announces cash call proposal to raise up to RM2.86b

TheEdge Wed, May 17, 2017 09:24pm - 6 years View Original


KUALA LUMPUR (May 17): Malaysian Resources Corp Bhd (MRCB) announced this evening that it has proposed a one-for-one renounceable rights issue to pare down its borrowings and to finance the refurbishment of the national sports complex in Bukit Jalil.  

The cash call, which will be sweetened by free detachable warrants on one-for-five basis, will raise between RM2.17 billion and RM2.86 billion.

As at end-2016, MRCB’s total bank borrowings which has an average annual interest rate of 5.6%, stood at RM2.94 billion. Meanwhile, the group's cash balance was at RM592.77 million.

According to MRCB, the proceeds from the rights issue will be used to finance the refurbishment of the national sports complex in Bukit Jalil, besides paring down its borrowings and developing new property projects, as well as for general working capital.
 
In a filing with Bursa Malaysia, MRCB said it intends to issue up to 2.86 billion in rights shares, together with up to 571.34 million free detachable.
 
The group’s two substantial shareholders — the Employee Provident Fund (EPF) and Gapurna Sdn Bhd — have given the undertaking of taking up the unsubscribed rights shares. 

Both EPF and Gapurna are applying to authorities for exemption from the obligation to undertake a mandatory offer arising from the application for excess rights shares under the proposed rights issue, as well as the subsequent exercise of the rights warrants into new MRCB shares.

EPF currently owns a 33.55% stake in MRCB, while Gapurna — the private vehicle of MRCB’s group managing director Tan Sri Mohamad Salim Fateh Din — owns a 16.78% stake.
 
Meanwhile, Bank Kerjasama Rakyat Malaysia Bhd and pilgrim fund Lembaga Tabung Haji owns 7.92% and 8.17% respectively.

On the amounts to be raised, MRCB said it has earmarked some 45% or RM975 million which be paid to its 85%-controlled subsidiary Rukun Juang Sdn Bhd, held via MRCB Land Sdn Bhd.
 
Rukun Juang had on Oct 28, 2015 signed a privatisation with the government — Ministry of Youth and Sports and Syarikat Tanah dan Harta Sdn Bhd — to refurbish and upgrade facilities at the national sports complex in Bukit Jalil.
 
“The proceeds to be raised from the Proposed Rights Issue are intended to be advanced to RJSB to finance the Privatisation of the national sports complex,” MRCB said.
 
At the same time, MRCB will set aside some 38% or RM826.32 million to repay its borrowings to financial institutions that include Affin Bank Bhd, Affin Hwang Investment Bank Bhd, RHB Islamic Bank Bhd and Malaysia Building Society Bhd.  
 
“The repayment of borrowings amounting to approximately RM826.32 million is expected to result in an annual gross interest savings of approximately RM46.69 million to the company, under both the Minimum Scenario and Maximum Scenario,” MRCB added.
 
MRCB also said it plans to set aside between 11% or RM233.04 million and 32% or RM916.9 million from the total proceeds, to fund its property development and construction projects which include Lot 94 in Jalan Kia Peng, Lot F in Kuala Lumpur Sentral, Phase 2 of 9 Seputeh, and Sentral Suites.
 
MRCB shares closed at RM1.74 today, for a market capitalisation of RM3.79 billion.

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