KUALA LUMPUR: Minetech Resources Bhd's (MRB) rights issue of irredeemable convertible preference shares (ICPS) has been oversubscribed by 45.53 per cent under the rights issue of ICPS.
In a filing with Bursa Malaysia today, MRB said total valid acceptances and excess applications for 847.94 million ICPS were received as of the closing date (October 8), representing 145.53 per cent of the total 582.66 million ICPS available for subscription.
The ICPS was issued at the price of RM0.03 per ICPS on the basis of one ICPS for every two existing shares held by entitled shareholders.
Its executive chairman Datuk Awang Daud Awang Putera said the company's board of directors deemed the rights issues of ICPS, alongside the upcoming private placement of new MRB shares to be the most appropriate avenue.
Awang said the avenue is needed to raise the required funds without incurring interest costs associated with bank borrowings or through the issuance of debt instruments, hence minimising any potential cash outflow arising from interest servicing costs.
MRB's rights issue of ICPS is part of a series of corporate exercises it mooted in March this year.
Among others, the exercise also entails a share capital reduction (SCR), private placement, diversification, amendments to the company's constitution and share issuance scheme.
"The SCR of RM90 million will see the corresponding credit arising from the reduction being used to reduce or eliminate accumulated losses.
"While the SCR will not result in any adjustment for the market price and the number of MRB shares held by shareholders, it will enhance the company's credibility with customers, suppliers and investors", said Awang.
Following the rights issue of ICPS, MRB is also planning to undertake a private placement of up to 349,598,600 new shares to be issued at a price to be determined later.
Awang said the company plans to raise approximately RM55.94 million from its private placement exercise, which will bring the total gross proceeds raised from its fundraising activities to RM73.42 million.
"The proceeds will be channelled to fund expenditure for construction projects, repayment of borrowings, the development cost for solar power plant, future business investments and acquisitions, expansion of quarry division, diversifications into the oil and gas sectors, expansion of its bituminous products division and working capital", he said.