KUALA LUMPUR: Zecon Bhd is raising up to RM46.1 million capital via a rights issue to address its current funding requirements to meet its short term obligations and liabilities as well as strengthen its financial position.
The Sarawak-based construction and property firm said the exercise could raise a minimum of RM19.4 million proceeds, depending on the response of its shareholders.
Zecon, in a statement today, said it had proposed to make a renounceable rights issue of up to 576.4 million of irredeemable convertible preference shares (ICPS) at an issue price of eight sen each and a conversion rate of 16 sen each.
"A total of RM26.2 million will be spent on working capital (maximum scenario) or RM3.4 million (minimum scenario) within the next six months.
"Similarly, RM5.4 million will be spent on the partial repayment of bank borrowings (maximum scenario) or RM3.6 million (minimum scenario) within the next three months while another RM700,000 will be spent for listing expenses," it added.
Each shareholder who already owns one Zecon share will receive four ICPS shares.
Zecon said the rights issue of the ICPS would further stimulate its cash flow, which in turn would boost its net profit.
It added that shareholders who opt to subscribe to the ICPS would be able to increase their equity participation in the firm.
The entitlement date will be determined later.
The company said it would also spend RM3 million (maximum scenario) or RM1 million (minimum scenario) within the next 12 months for future viable investments.
Zecon's net profit surged 59.7 per cent in the third quarter ended March 31, 2020 to RM9.15 million from RM5.73 million a year ago.
This was mainly attributed by the Hospital Kanak-Kanak Universiti Kebangsaan Malaysia and the Pan Borneo projects.
Its revenue for the quarter rose 26.9 per cent to RM143.1 million from RM112.8 million previously.
For the nine-month period ended March 31 2020, the company registered a net profit of RM43.18 million compared with RM8.76 million net loss a year ago.
The company also proposed an employees' share option scheme of up to 15 percent of its total number of issued shares to recognise and reward eligible persons.