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Pegasus Heights to raise up to RM59.9m via rights issue, plans diversification

TheEdge Thu, Nov 15, 2018 11:01pm - 1 year ago

KUALA LUMPUR (Nov 15): Pegasus Heights Bhd plans to raise up to RM59.9 million via a renounceable rights issue to upkeep and promote its Centerpoint Seremban mall in Negeri Sembilan, to fund its diversification into providing food and beverage (F&B) services and to repay bank borrowings.

Pegasus said the proposed diversification will see it managing and operating up to eight F&B franchise outlets in Centerpoint Seremban.

"The board of directors opined that the enhanced tenant mix and increased footfall in Centerpoint Seremban will ultimately improve the occupancy rates and yield of the mall," it added in a filing with Bursa Malaysia today. 

The occupancy rate of the Centerpoint Seremban for the first six months ended June 30, 2018 stood at 53.7%.

The group said it has been facing challenges in filling up Centerpoint Seremban's remaining vacancies as there are many options available in the market and attractive rents which are being offered by competitors to secure potential tenants.

Pegasus is proposing to issue up to 5.99 billion rights shares on the basis of three rights shares for every one share, together with up to 3.99 billion warrants on the basis of two warrants for every three rights shares subscribed for, at the rights issue price of one sen apiece.

As at Nov 14, Pegasus has an issued share capital of RM130.11 million comprising 1.75 billion shares and 248 million unexercised share issuance scheme options.

The rights issue price of one sen represents a 20.5% discount to the theoretical ex-rights price (TERP) of 1.26 sen based on the five-day volume weighted average price (VWAP) of the Pegasus shares up to Nov 14.

The exercise price of 1.5 sen represents a 19.3% premium to the TERP of 1.26 sen based on the five-day VWAP of Pegasus shares up to Nov 14.

The actual proceeds to be raised from the proposed rights issue will depend on the actual number of rights shares subscribed by the entitled shareholders and/or their renouncee(s).

Assuming a minimum subscription level of 1.22 billion rights shares together with 810.16 million warrants, the group expects to raise a minimum of RM12 million from the proposed rights issue.

In the event the minimum subscription level is not achieved, Pegasus said it will not proceed to complete the proposed rights issue. 

And based on the maximum number of 5.99 billion rights shares available for subscription, a total of RM59.9 million is expected to be raised from the corporate exercise.

Pegasus Group plans to utilise RM13.5 million of the gross proceeds under the maximum scenario to repay bank borrowings, which would result in an interest savings of approximately RM1.1 million per year.

As at Nov 14, the total bank borrowings of Pegasus Group stood at RM14 million.

Meanwhile, the group is proposing to seek the shareholders' approval for the proposed diversification at an extraordinary general meeting to be convened.

"Moving forward, Pegasus Group expects its financial performance to improve with the commencement of the F&B business as it will not only generate an additional stream of revenue for the group, but also contribute to an increase in rental revenue for Centerpoint Seremban.

"The new F&B franchise business is also expected to increase footfall and this will in turn attract new tenants to occupy and operate outlets in the mall," it said. 

Subject to the relevant approvals being obtained, the proposals are expected to be completed by the second quarter of 2019.

Mercury Securities has been appointed as the principal adviser to the group for the proposals.

Pegasus shares closed unchanged at 2.5 sen today, with 30,000 shares done, bringing a market capitalisation of RM43.73 million.

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