KUALA LUMPUR (Oct 15): Loss-making Aturmaju Resources Bhd plans to raise up to RM10.1 million via a renounceable rights issue to fund its diversification into the provision of information technology (IT) solutions and services.
Aturmaju said the proposed diversification is part of the group’s plans to diversify its business activities and to provide another stream of revenue to reduce its dependence on its core existing business in the resource-based timber-related business.
In a filing with Bursa Malaysia today, the wood products manufacturer has proposed to undertake a renounceable rights issue of up to 1 billion irredeemable convertible preference shares (ICPS) on the basis of 15 ICPS for every one existing share held on an entitlement date to be determined later at an issue price of one sen per ICPS.
The conversion price has been set at 20 sen for one new Aturmaju share, which represents a 34% discount to the theoretical ex-rights price of Aturmaju’s shares of 30.3 sen, based on the five-day weighted average market price of the shares up to Oct 3 of 40.6 sen.
Under the minimum scenario, a total of RM4 million is expected to be raised from the corporate exercise, of which RM2.8 million will be used for development costs of ERP solutions, RM500,000 for working capital and the rest for estimated expenses pertaining to the rights issue.
In a maximum scenario, a total of RM7.7 million will be used for development costs of ERP solutions and another RM1.7 million for working capital.
In June, Aturmaju had commenced its IT business through the award and completion of an IT project to design, develop, install and support ERP solutions with a project value of RM20,000. As at Oct 3, the group has secured another three ERP projects, worth a combined RM5.6 million.
"In addition, the group is also in discussions with another three prospective clients to secure additional IT projects focusing on providing/maintaining ERP solutions, with a total estimated project value of RM9 million," the filing added.
“The board of directors expects the IT business to result in a diversion of more than 25% of Aturmaju group’s net assets or contribute 25% or more of the group’s net profit," it said.
In this regard, the board will seek approval from the company’s shareholders for the proposed diversification at an extraordinary general meeting to be convened.
"Barring any unforeseen circumstances and subject to relevant approvals being obtained, the proposals are expected to be completed by the first quarter of 2019," Aturmaju said.
Aturmaju shares rose 0.5 sen or 1.21% to close at 42 sen today, giving it a market capitalisation of RM28.23 million.