KUALA LUMPUR (Oct 21): Tanco Holdings Bhd plans to raise up to RM47.7 million via a private placement for repayment of bank borrowings and investments in complementary businesses.

The exercise will see up to 176.66 million shares or 10% of the group's total issued shares to independent third party investors, issued at a price to be determined later, said the loss making firm in a filing with Bursa Malaysia on Friday (Oct 21).

For example, based on an illustrative price of 27 sen per placement share, the issue price would represent a discount of approximately 9.67% to the five-day volume weighted average price of the shares at 29.89 sen.

The bulk of the RM30.5 million of the gross proceeds will be allocated for repayment of bank borrowings, RM13 million will be used for acquisitions or investments in complementary businesses and another RM2.5 million for its working capital.

As of Sept 30, the group's total borrowings stood at approximately RM40.8 million, and these included an outstanding amount of approximately RM34.2 million in respect of a bridging financing facility secured by its unit Palm Springs Development Sdn Bhd from Bank Kerjasama Rakyat Malaysia Bhd.

In addition to the outstanding principal amount of RM34.2 million, the group had also accrued an amount of RM4.7 million for profit shortfall and penalty in respect of the bridging financing.

"The said bridging financing (with a total limit of RM62 million) was secured from the bank in 2012 to part finance the cash settlement sum to Lehman Brothers Commercial Corp Asia Ltd (in liquidation) and to part finance the construction costs and working capital requirement in relation to a mixed development project in Palm Springs Resorts City, Port Dickson," it added.

Tanco is principally involved in property development, resort and club operations, construction, trading of construction materials and pharmaceutical or health supplement sectors.

Currently, the group is focusing on developing its 480 acres of sea-fronting land in Port Dickson into an integrated resort development known as Dickson Bay. Upon completion, Dickson Bay is expected to be the largest integrated resort in Port Dickson.

Moving forward, it will continue to forge strategic tie-ups with domestic and international players in order to leverage on each other's strengths to facilitate the group's master development plan of Dickson Bay.

As for the pharmaceutical sector, Tanco had ventured its business into the health supplement industry via the acquisition of Herbitec (M) Sdn Bhd, which was completed on April 13 last year. It anticipates demand for health supplements in Malaysia in the future.

Tanco's board expects the proposed private placement to be completed by the fourth quarter of this year.

Tanco's share price settled 11.48% higher at 34 sen on Friday, bringing a market capitalisation of RM590.96 million.