KUALA LUMPUR (June 9): Bioalpha Holdings Bhd has proposed a rights issue of warrants to raise up to RM19.19 million, mainly for the expansion of its pharmacy business as well as repayment of bank borrowings.

The rights issue of up to 639.5 million warrants will be on the basis of three warrants for every eight existing shares held on an entitlement date to be determined later, the  health supplement group said in  a bourse filing.

It added that based on an assumed price of three sen per warrant, the group will raise gross proceeds of RM3 million under the minimum scenario and RM19.19 million under the maximum scenario.

The exercise price of the warrants is assumed at 10 sen, representing a discount of approximately 1.96 sen or 16.36% to the pro forma net assets per share as at end-December.

Of the RM19.19 million gross proceeds, Bioalpha plans to allocate RM6.6 million for the procurement of stocks or inventories for up to 12 pharmacy outlets.

The group is involved in the supply of stocks to retail pharmacy chains under the Constant Pharmacy brand name, through its wholly-owned unit Ediconstant Holding Sdn Bhd.

Another RM5.5 million will be used for repayment of bank borrowings, followed by RM3.5 million for launching of new health supplement products (related to respiratory system, gut health, eye health, joint health and immunity),  RM2.835 million for working capital, and the remaining RM750,000 for estimated expenses relating to the rights issue.

Bioalpha has not undertaken any equity fund-raising exercise in the past 12 months.

The group has appointed TA Securities Holdings Bhd as the adviser for the proposed rights issue of warrants, which is set to be completed by the third quarter of this year.

Shares of Bioalpha closed down half a sen or 5% at 9.5 sen on Friday, giving the group a market capitalisation of RM109.21 million.