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KUALA LUMPUR, April 15 -- Malayan Cement Bhd is expected to raise RM226.95 million mainly to repay bank borrowings via a proposed placement of up to 85 million shares, representing 10 per cent of the company’s issued shares as at April 14, 2021.
The total fund is based on the illustrative issue price of RM2.67 per placement share, it said.
In a filing to Bursa Malaysia, Malayan Cement said RM53.93 million out of the total proceeds would be used for working capital, RM170 million to repay bank borrowings, and RM3 million defray estimated expenses relating to the proposed placement.
Post-placement, the company's total borrowing is expected to be reduced to RM759.62 million from RM929.62 million, bringing the gearing ratio lower to 0.30 times from 0.41 times as at June 30, 2020.
Upon completion of the placement, which is expected by the fourth quarter of the financial year ending June 30, 2021, Malayan Cement’s public shareholding spread will increase to 29.96 per cent from 22.95 per cent.
On the outlook for the sector, it said over the longer term, Malaysia as a developing nation with a positive population growth and increasing urbanisation creates an intrinsic need for infrastructure development, thereby supporting the long-term stability and growth of the building materials industry.
"The Board is optimistic of the prospects and outlook of the Malayan Cement Group."
It said the Malaysian construction sector is expected to rebound in 2021 driven by the acceleration and revival of major infrastructure projects as the country recovers from the adverse impact of COVID- 19.
The potential revival of previously delayed large-scale infrastructure projects would release pent-up demand, translating into growth in the construction sector and, consequently, demand in cement and concrete products, it added.
Maybank Investment Bank has been appointed as the Principal Adviser and Placement Agent for the exercise. Malayan Cement has not undertaken any equity fund raising exercise since 2003.