HeiTech Padu says funds raised from placing out shares will be used to pay salaries, suppliers

NST Fri, Apr 26, 2024 07:58pm - 1 month View Original


KUALA LUMPUR: HeiTech Padu Bhd plans to use most of the expected RM22.64 million proceeds from a proposed private placement to pay staff salaries and suppliers and creditors.

In a filing with Bursa Malaysia Securities Bhd, HeiTech said the proceeds are intended to be used for funding working capital rather than financing the group's business activities.

It said its business activities are predominantly sustained through borrowings, specifically revolving credits and contract financing, which are subsequently repaid using customer receipts.

HeiTech said with the increase of overdrafts for working capital needs, the proposed private placement serves to mitigate incurring additional interest expenses from borrowings.

It further explained that the proposed private placement will help the company raise funds quickly and affordably compared to other options like a pro-rata issuance of securities, which usually takes longer and relies heavily on market sentiment.

HeiTech said, about 83 per cent of the private placement proceeds will be used to pay salaries and suppliers, while the remainder will be for office administrative, utilities and overhead expenses.

Meanwhile, HeiTech Padu also said out of the cash and bank balances of RM54.26 million as at FY23, RM22.75 million is held as deposits with licensed banks, serving as collateral for its borrowings. 

The remaining available cash held at the bank and on hand amounting to RM31.51 million will be available towards the company's business activities, such as project implementation cost, purchase of hardware and software, and more. 

A portion of these funds will also be transferred to deposits with licensed banks to serve as collateral for the company's borrowings related to newly secured contracts in 2024.

Since the start of the year, the company has won three government contracts.

The company recently issued a statement attributing its contract wins, based on merit, to its ability to consistently deliver  across different government administrations.

The company's share price was down 1.4 per cent to RM2.10 a share at market close, giving it a arket capitalisation of RM212.6 million.

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