KUALA LUMPUR (May 22): Priceworth International Bhd announced that its shareholders have unanimously approved the proposal to acquire Forest Management Unit 5 (FMU5), a sustainable forest management concession in Sabah for RM260 million, which is significantly lower than the independently appraised value of RM433.8 million.

In addition, Priceworth said its shareholders have also approved the proposal to raise RM102.37 million cash through a renounceable two-for-one rights issue with bonus shares at 5 sen apiece, the proceeds of which will be used to pare down its borrowings and as working capital.

"This is a significant milestone. The rights issue exercise de-gears Priceworth as a precursor to the initial public offering at Singapore Exchange and puts Priceworth in a solid financial footing.

"We are one step closer to cementing Priceworth’s position as the leading integrated timber player in Sabah. This transformative acquisition will secure a sustainable supply of logs for Priceworth for the foreseeable future,” Priceworth executive director Richard Koo said in a media statement today.

"We are bullish on the future outlook of the company and the group, as a sustainable supply of logs will enable us to improve productivity and boost our margins,” he added.

Earlier, Priceworth said its shareholders had at the extraordinary general meeting today approved its plan to acquire Rumpun Capaian Sdn Bhd via GSR Pte Ltd.

Rumpun Capaian holds a timber extraction and replanting rights to FMU5 covering 88,820 ha of commercial Class II forest in Sabah’s Trus Madi forest reserve.

As for the rights issues, Priceworth said it had on May 18 appointed AmInvestment Bank Bhd, RHB Investment Bank Bhd, Mercury Securities Sdn Bhd, MIDF Amanah Investment Bhd and Kenanga Investment Bank Bhd as the underwriters.

Priceworth is also planning an initial public offer (IPO) of GSR on the Singapore Exchange (SGX), and has appointed UOB Kay Hian as the principal advisor.

Priceworth shares dropped 2.5 sen or 9.26% and closed at 24.5 sen today, for a market capitalisation of RM250.81 million.