KUALA LUMPUR (Jan 15): KNM Group Bhd plans to raise up to RM54.93 million via a private placement to pay off its bank borrowings and to fund some ongoing projects.

In a bourse filing, the process equipment manufacturer aims to issue up to 10% of its share capital or 296.92 million shares, which will be placed out to third party investors to be identified.

The estimated proceeds to be raised is based on an indicative issue price of 18.5 sen per share. The actual issue price has yet to be fixed.

It said RM20 million of the proceeds raised will be used to repay bank borrowings, while RM33.63 million will be used to procure raw materials, pay sub-contractors and other related expenses for its ongoing contracts in Indonesia, Malaysia and Guyana.

As at Nov 30,2020, the group's borrowings stood at RM1.36 billion — comprising bank overdrafts, bankers acceptances, bill payables, revolving credit, term loans and hire purchase agreements.

"Based on the average annual interest rate of 4.6%, the additional repayment of bank borrowings amounting to RM20 million is expected to result in an annual gross interest savings of approximately RM0.92 million per annum to the group," KNM said.

The placement is expected to be completed in the first quarter of 2021.

Shares in KNM finished 2.50% or half a sen lower at 19.5 sen today, valuing it at RM583.52 million. It saw 43.51 million shares done.