Thursday 03 Oct 2024
By
main news image

This article first appeared in The Edge Financial Daily on April 8, 2020 - April 14, 2020

KUALA LUMPUR: Sarawak Consolidated Industries Bhd (SCIB), whose share price has more than doubled in the past two weeks, has announced that it wants to raise fresh capital of RM66.5 million to fund the upcoming construction projects that it will secure from its sister company — Serba Dinamik Holdings Bhd.

The size of the placement is equivalent to one-third of its enlarged total issued share capital.

On top of that, the company is proposing a recurrent related-party transaction of a revenue and trading nature between SCIB and Serba Dinamik to the tune of RM1.37 billion.

In a filing with the exchange yesterday, SCIB said it expects to secure several projects from Serba Dinamik for the provision of construction and project management services, and the supply of precast products and construction materials for overseas and local projects.

SCIB and Serba Dinamik have a common substantial shareholder, Datuk Dr Mohd Abdul Karim Abdullah. He is the non-independent non-executive chairman of SCIB holding 47.5% stake in the company. He is also group managing director and chief executive officer of Serba Dinamik with a 21.5% equity stake.

“Pursuant to the above, the awards of the projects, which are forthcoming, [are] considered as related-party transactions that are recurrent of a revenue or trading nature and are in the ordinary course of day-to-day operations of SCIB,” the statement said.

The placement will be implemented in tranches within six months from approval, with the issue price to be determined by the board at a later date, it added.

SCIB’s share price took a nosedive during the global equity rout, plunging to a low of 93 sen last March. However, it bounced back strongly to RM2.16 yesterday. It has gained 15% year to date. SCIB is among the minority group of stocks that have gone up so far this year.

SCIB said the acceptance of projects to be awarded by Serba Dinamik is expected to increase the order book and earnings of the construction and manufacturing business segments of the group.

The group’s order book currently stands at RM1.09 billion, of which approximately 95.6% is contributed by its construction segment.

      Print
      Text Size
      Share