JAKS Resources proposes RM40.71 million share placement to reduce debt and fund operations

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JAKS proposes share placement

Highlights

JAKS Resources plans to issue up to 262.63 million new shares to raise RM40.71 million through a third-party placement.
RM33.50 million of the placement proceeds will be used to repay borrowings, reducing total bank debt from RM422.39 million to RM388.89 million and saving RM2.37 million in annual interest.
The remaining RM5.91 million is allocated for general working capital, while JAKS Resources shares closed 3.45% higher at 15 sen, with a market capitalisation of RM393.94 million.

This article was translated from the original. Read the original version by our correspondent here.

Placement details and use of proceeds

As reported by The Edge Malaysia, citing its stock exchange filing, the construction and energy group plans to issue up to 262.63 million new shares to third-party investors to be identified later, raising an estimated RM40.71 million.

The final issue price has yet to be determined. The estimated proceeds are based on an illustrative price of 15.5 sen per share, while the final price will not exceed a 10% discount to the five-day volume-weighted average market price of JAKS Resources shares immediately before the pricing date.

Of the indicative proceeds, JAKS Resources has allocated RM33.50 million to partially repay existing credit facilities. The move is expected to generate annual interest savings of approximately RM2.37 million.

The remaining RM5.91 million has been allocated for general working capital, including staff costs, directors' fees and administrative expenses, while the balance will be used to cover the estimated costs of implementing the proposal. M&A Securities Sdn Bhd has been appointed as adviser and placement agent for the transaction.

Impact on the company's financial position

As of 13 Oct, the group's total bank borrowings stood at RM422.39 million, comprising RM232.2 million in short-term borrowings and RM190.15 million in long-term borrowings. Following the partial debt repayment using the placement proceeds, the total is expected to be reduced to RM388.89 million.

The proposed placement reflects the company's focus on strengthening its balance sheet while maintaining funds for daily operations. JAKS Resources shares closed half a sen higher, or 3.45%, at 15 sen on Thursday, giving it a market capitalisation of RM393.94 million.

Genting Bhd's proposed RM1.25 billion rights issue came into focus as the company detailed the use of proceeds to reduce its debt burden and meet financing needs, including interest costs. In our earlier report, we also discussed the basis for the rights issue discount, potential interest savings from loan repayments, and pressure on the share price amid concerns over earnings dilution.

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