SINGAPORE - Metal engineering firm MSM International plans to launch a one-for-four rights issue, mainly to fund general corporate and working capital and the expansion of its existing business, it said on Sunday (March 31).
The renounceable non-underwritten rights issue of up to 22.5 million new shares, at $0.07 apiece, is expected to yield around $1.5 million in net proceeds after deducting about $100,000 in estimated costs. This is on the basis of one rights share for every four existing ordinary shares in the capital of the company, it said in a bourse filing.
The issue price per rights share of $0.07 represents a discount of around 30 per cent to the volume-weighted average price of $0.10 per share on the Singapore Exchange (SGX) on March 29, 2019, the last trading day before the announcement. It is also a discount of around 25.53 per cent to the theoretical ex-rights price of $0.094 per share.
MSM International plans to use the net proceeds to augment its balance sheet and capital base, as well as reduce its gearing. The group added that 70 per cent will be used for general corporate and working capital purposes, while 30 per cent will go towards expansion of existing business and new investment opportunities which arise.
According to its first-half year results ended Sept 30, 2018, the company had a negative cash flow of approximately RM$3.4 million ($1.1 million), although it recorded a pre-tax profit of approximately RM$3.8 million.
The company added it will be making an application to the SGX, through its sponsor, for the Catalist listing of and quotation for the rights shares. It said an appropriate announcement will be made in due course when the company receives the rights share listing and quotation notice from SGX.