KUALA LUMPUR (June 13): Practice Note 17 (PN17) outfit Pharmaniaga Bhd has proposed a private placement of up to 10% of its share base to raise an indicative amount of up to RM44.54 million for working capital.

Pharmaniaga, which has booked negative net operating cash flow since 2020, intends to issue up to 131.02 million shares for the placement, with an indicative price of 34 sen per share.

The placement shares will be issued to third party investors to be identified later, Pharmaniaga said. Shares of the pharmaceutical company closed 2.56% or one sen lower to 38 sen on Tuesday (June 13).

Last month, BP Healthcare Group confirmed to The Edge that it has expressed its interest in Pharmaniaga. The latter is understood to have received several proposals from interested parties looking to take a stake and participate in the pharmaceutical company’s restructuring, The Edge weekly reported. 

The company fell into the PN17 status in February this year, after booking provisions of RM552.3 million for unsold Covid-19 vaccines which resulted in negative equity in its balance sheet. Its capital deficiency stood at RM119.19 million, according to its earlier filing.

At end-March, it had trade payables of RM722.3 million against cash and bank balances of RM56.6 million.

Amid the financial stress faced by the company, concerns were raised about Pharmaniaga’s ability to carry out its responsibilities to manage the logistics and distribution of medicines and medical supplies to government health facilities.

In April, the Ministry of Health pointed to an extension for Pharmaniaga’s concession agreement, due to expire in June, for another 10 years.

In May, the government said Pharmaniaga will announce a regularisation plan as early as August this year. It has a deadline of Feb 27, 2024 to submit a regularisation plan to Bursa Securities.

In its first quarter ended March 31, 2023 (1QFY2023), Pharmaniaga’s net profit fell 90.5% year-on-year to RM2.65 million, as revenue slipped 8.5% to RM880.45 million, coupled with higher finance costs and operating expenses.

Pharmaniaga’s largest shareholder is Boustead Holdings Bhd with a 52% stake. Boustead is being taken private by the Armed Forces Fund, which controls a 97.63% stake in the conglomerate.