KUALA LUMPUR (Aug 8): Southern Cable Group Bhd proposes to undertake bonus issue of warrants on the basis of one warrant for every two shares, hoping to raise as much as RM117.68 million for working capital.

The amount expected to be raised from the five-year warrants is based on an indicative exercise price of 29.42 sen, which represents a discount of about 20% to 36.78 sen per share, the group’s five-day volume weighted average market price up to and including July 20 this year.

The bonus issue is deemed the most appropriate avenue to reward existing shareholders, while enabling the group to raise additional working capital, Southern Cable said in a stock exchange filing on Monday (Aug 8).

The group, which manufactures cables and wires that are used for power distribution, communications, as well as control and instrumentation applications, has over RM800 million orders in hand, which it expects to keep it busy until 2024.

Some of the group’s notable orders include a recently-secured RM294 million contract for the supply of underground cables and conductors from Tenaga Nasional Bhd in July 2022, and a RM13 million contract for the supply of copper telephone cables from a local telecommunications provider in March 2022.

Southern Cable, which was listed on Bursa Malaysia in October 2020, is 35%-controlled by managing director Tung Eng Hai and his brother-in-law Wong Meng Kee, who is also executive director of the group, via Sino Shield Sdn Bhd. The stock's initial public offering price was 34 sen.  It closed at 36.5 sen per share on Monday, half sen or 1.35% lower than last Friday, giving it a market capitalisation of RM292.00 million.

“We are preparing the necessary resources that will enable us to capture the optimistic outlook in the near term, in line with our operations requirements and business development strategies,” Tung said in a separate statement.

He said management is intensifying sales efforts to target new markets in Malaysia and overseas, such as new customers in the US.

“Our growth aspirations necessitate this corporate exercise, as the majority of funds raised will go towards supporting increased working capital requirements. It would also provide shareholders [with] an opportunity to increase their equity participation in our expanding company,” he added.