KUALA LUMPUR (May 13): Fitters Diversified Bhd is launching another cash call this year, this time to raise up to RM148.99 million via a renounceable rights issue with free warrant, which will be used for working capital requirements for palm oil mill operation, repayment of borrowings as well as funding its fire services projects.

It is worth noting that it had completed in March this year a private placement involving 30% of its issued shares that it had proposed in December last year. It managed to raise RM22 million to repay bank borrowings and for working capital.

In a bourse filing with Bursa Malaysia, Fitters Diversified said the cash call will be undertaken on the basis of three rights shares with two free warrants for every one existing Fitters Diversified shares held at an entitlement date to be fixed.

The exercise will involve up to 1.86 billion rights shares with 1.24 billion free detachable warrants.

The group said it intends to raise minimum proceeds of RM15 million and a maximum of RM148.99 million from this cash call exercise.

In the case of minimum proceeds raised, it would involve 187.5 million right shares with 125 million warrants, based on an illustrative issue price of eight sen per right share.

“The minimum subscription level will be met via the undertakings from Hoo Swee Guan (executive director of Fitters) and Tan Li Sin (non-independent non-executive director of Fitters) to apply and subscribe in full for their rights share entitlements and additional rights shares not taken up by other entitled shareholders by way of excess rights shares application,” the group noted.

If the maximum proceeds scenario is achieved, it would raise RM149.99 million. Of which, RM60 million will be used for working capital for the group’s palm oil mill operation, and RM50 million for the repayment of borrowings.

Another RM38.19 million will be used for funding the group’s fire services projects and the remaining RM800,000 to defray expenses for this exercise.

As of latest practicable date April 22, 2022, the group’s borrowings stood at RM77.27 million.

The proposed rights issue with warrants is expected to be completed by the third quarter of 2022.

Fitters is currently loss-making. Its consolidated results for three months ended Dec 31, 2021 showed its net loss widened to RM8.93 million, from RM6.61 million a year ago, despite revenue doubling to RM104.01 million from RM51.08 million.

The quarterly net loss was mainly dragged down by its property development and construction division as the division posted a loss before tax of RM9.74 million against a profit before tax of RM1.16 million before.

As at Dec 31, 2021, Fitters' debt-to-equity ratio sat at 0.39 times. The group had total liabilities amounting to RM138.93 million while total equity stood to RM356.04 million.

Fitters had cash and cash equivalents of RM45.55 million as at Dec 31.

It is worth noting that the group had changed its financial year end to March 31, from Dec 31.

The share price of Fitters settled unchanged at 13.5 sen, for a market capitalisation of RM84 million.