KUALA LUMPUR (May 12): SMTrack Bhd has proposed a private placement exercise to raise up to RM5.3 million for working capital.

"This will help to support the day-to-day operations of the company as it focuses on improving its business performance. This is especially important to the company in these challenging times, considering that the Covid-19 pandemic has adversely affected businesses and economies worldwide," said SMTrack.

In a filing with Bursa Malaysia today, the company said it intends to issue up to 53.01 million new shares, representing 30% of its issued shares as at May 8, 2020, at an issue price to be determined later.  

The placement shares will not be priced at a more than 10% discount to the 5-day volume weighted average market price of SMTrack shares immediately before the price fixing date.

The company said for illustration purposes, based on the issue price of 10 sen per share, the placement shares could raise up to RM5.3 million, which will be utilised mainly for working capital. The working capital encompasses payment of utilities expenses, rental, trade and other payables and/or administrative and operating expenses.

"Other avenues of fundraising such as a rights issue may not suit the group considering its needs, as this will require further cash injection from existing shareholders," said SMTrack.

The company expects the private placement to be completed within six months from the date of the approval from Bursa Securities.

Kenanga Investment Bank Bhd has been appointed as the adviser and placement agent for the exercise.

SMTrack's share price closed unchanged at 12 sen today, giving it a market capitalisation of RM21.2 million.