London Biscuits raises RM11m via share placement but defaults in loan payment

TheEdge Fri, Aug 23, 2019 11:40pm - 4 years View Original


KUALA LUMPUR (Aug 23): London Biscuits Bhd, which defaulted on a RM9.8 million loan payment, has managed to place out its last tranche placement share at an average issue price of 32.4 sen per share, more than double its current share price, according to the company’s filing to Bursa Malaysia.

On the back of envelope calculation, the amount raised by the Johor-based confectionery maker is estimated to be about RM11 million fresh cash.

In the filing, the Practise Note 17 firm said the private placement is deemed completed following the expiry of the approval from Bursa Securities which was granted vide its letter dated Feb 26, 2019, for the implementation of the private placement.

A total of 34.3 million shares were placed out pursuant to the exercise, it said.

To recap, the first tranche comprised the issuance of 10 million shares at 34.5 sen, which was completed on April 17.

This was followed by the second tranche of 11.3 million placement shares at 32.1 sen per share, although the company only received payment for 8.8 million shares as at April 25.

The company had then re-fixed the issue price for the remaining 2.5 million shares, along with a third tranche of 8 million shares at 30 sen per share.

All of the shares were successfully placed out, with the company later announcing a fourth tranche of the exercise on June 24, which saw the placement of five million shares at 33.5 sen per share, which were also taken up.

On average, the shares were placed out at 32.4 sen per share, more than double its current share price.

London Biscuits’ share price dived below 30 sen in July, after the news that it had defaulted on a RM9.83 million banking facility from the Bank of Nova Scotia.

The company cited cash flow constraints for the default, which has raised eyebrows, as its accounts show that it is asset rich. As at March 31, 2019, total assets amounted to RM845.83 million, which translated into a net asset value per share of RM1.57.

This means that it defaulted on a banking facility that made up only about 1% of its total assets.

The Edge Weekly reported that based on its annual report for the financial year ended Sept 30, 2018 (FY2018), London Biscuits’ total assets amounted to RM815.42 million. When compared with its peers like Oriental Food Industries Holdings Bhd (total assets: RM256.05 million for the financial year ended March 31, 2019) and Apollo Food Holdings Bhd (total assets: RM263.53 million for the financial year ended April 30, 2018), its total assets are significantly higher.

Read also:  https://www.theedgemarkets.com/article/london-biscuits-assets-are-worth-...

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