KUALA LUMPUR (April 27): ACE-listed Ancom Logistics Bhd which provides bulk storage facilities for liquid chemicals, has proposed a private placement of up to 10% of its issued and paid-up capital to third party investors to be identified later, to raise funds for working capital.

In a filing with Bursa Malaysia this evening, Ancom Logistics (fundamental: 2.4; valuation: 1.2) said the discount for the issue price — to be fixed at a later date — will not be more than 10% to its five-day volume weighted average price (VWAP) calculated up to the price-fixing date, and that the price will not be lower than its par value of 5 sen.

“For illustrative purposes only, the placement shares are assumed to be issued at RM0.155 each, representing a discount of approximately 8.8% to the five-day VWAP shares up to and including latest practicable date of RM0.170,” the group said in a filing, adding the actual gross proceeds to be raised will depend on the issue price and actual number of placement shares to be issued.

Based on the indicative issue of 15.5 sen per share, Ancom Logistics expects to raise some RM7.34 million, the bulk of which will be used for working capital that include general operating expenses, repayment of trade creditors, and payment of salaries to its staff.

The private placement transactions are expected to enlarge its issued and paid-up capital to 520.62 million shares, from 473.29 million shares currently, which may dilute its earnings per share for the financial year ending May 31, 2016.

Subject to regulatory approval, Ancom Logistics expects to complete the transaction by the third quarter of 2015 (3Q15).

Ancom Logistics is a 11.87%-direct subsidiary of Ancom Bhd (fundamental: 0.55; valuation: 1.2) — which manufactures and sells agriculture chemicals such as herbicides, pesticides, fungicides and insecticides.

Both companies are controlled by Datuk Siew Ka Wei; he is Ancom’s group managing director with a 19.76% stake and Ancom Logistics’ executive vice chairman with a 47.35% stake.

Ancom Logistics closed 2.94% lower at 16.5 sen today, with 1.737 million shares traded, valuing it at RM78.09 million.

Meanwhile, Ancom ended its trade today 5.94% or 3 sen lower at 47.5 sen, with 249,200 shares done, for a market capitalisation of RM102.66 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)