This article first appeared in The Edge Financial Daily on October 10, 2018 - October 16, 2018

KUALA LUMPUR: Luster Industries Bhd is proposing to raise RM16.99 million via a private placement to third-party investors at an issue price to be determined later to finance the group’s property development and manufacturing business. In a filing with Bursa Malaysia yesterday, Luster said the proposed placement entails the issuance of up to 197.6 million new shares or a 10% stake in the company.

“Assuming the placement shares are placed out at the indicative issue price of 8.6 sen, the company is expected to raise approximately RM16.99 million,” it added.

The illustrative issue price of 8.6 sen per placement share represents a 10% discount to the five-day volume weighted average market price of Luster shares as at Oct 8.

Luster Group intends to utilise RM5 million of the RM16.99 million proceeds for the building and infrastructure work of Phase 2B of the Taman Perda Indah mixed project in Seberang Perai Utara, Penang, with an estimated gross development value (GDV) and gross development cost (GDC) of RM195.73 million and RM165.51 million respectively. Another RM2 million will be used for pre-development and pre-marketing expenses for the Hulu Langat Project mixed development in Selangor commencing in the second half of 2019, and is expected to be completed in the second half of 2022. It has an estimated GDV of RM242.38 million and GDC of RM207.32 million.

The remaining RM9.9 million of the proceeds was earmarked for purchasing raw materials for the group’s manufacturing business.