KUALA LUMPUR (Dec 27): YGL Convergence Bhd has proposed to undertake a private placement of up to 23.8 million shares to raise up to RM3.09 million.

In a filing with Bursa Malaysia today, YGL said the placement size represents 10% of its total issued shares, and the estimated proceeds raised are based on an issue price of 13 sen per share, which is an 8.19% discount to its five-day volume weighted average market price of 14.16 sen.

Upon getting the proceeds, YGL said it intends to utilise up to RM1 million for business expansions, up to RM1 million for research and development, up to RM1.006 million for working capital, and RM90,000 for expenses related to this private placement.

YGL said the placement was decided after due consideration of the various methods of fund raising. Its board is of the view that the proposed private placement is currently the most appropriate avenue of fund raising, as it will enable the company to raise funds expeditiously for the above-mentioned purposes.

The group also said the private placement would provide an avenue to raise funds without incurring interest cost as compared to bank borrowings, increase the size and strength of the company's capital base and shareholders' funds, and potentially improve the liquidity and marketability of the issued shares.

YGL said it expects to complete the complete the corporate exercise in the first quarter of 2020.

YGL's share price went up one sen or 8% to 13.5 sen at market break, giving it a market capitalisation of RM31.4 million.