KUALA LUMPUR (July 15): Kejuruteraan Asastera Bhd (KAB) plans to raise RM106.13 million via a private placement for its renewable energy business and the repayment of bank borrowings.

In a bourse filing, KAB said it would be issuing 169.18 million shares or 10% of its total share capital of 1.69 billion shares for private placement. The shares will be placed to third party investors.

Based on the placement’s illustrative issue price of 63 sen, the group will be raising RM106.13 million. KAB’s share price closed at 85 sen today, valuing it at RM1.44 billion. The stock has climbed 40% in nine trading days from 61 sen on July 5.

Of the proceeds, RM50 million will be used for its renewable energy projects, of which RM35 million will be for solar power projects and RM15 million will be for clean energy generation projects.

Meanwhile, RM25 million will be used to pare down bank borrowings.

As of June 22, the group’s borrowings stood at RM32.6 million. It will be using the proceeds from the exercise to deal with RM25.71 million in trade financing, bankers acceptances and overdrafts. As a result it expects an estimated interest saving of RM1.08 million a year.

Upon completion of the private placement, KAB’s share capital will increase to 1.86 billion from 1.69 billion currently.

Following the placement, its borrowings will decline to RM2.19 million, translating into a gearing ratio of 0.01 times compared with 0.34 times currently.

The placement is expected to be completed by the fourth quarter of the year.

Mercury Securities Sdn Bhd is the principal adviser and placement agent for the placement.