KUALA LUMPUR (Nov 29): Pharmaniaga Bhd, which has been granted seven concessions to provide medical supplies to public hospitals, is making a cash call via a renounceable rights issue of new shares plus private placement, to raise up to RM654.61 million to pare down debts. 

As at Nov 15, Pharmaniaga’s total borrowings stood at RM1.19 billion.

In a bourse filing, the Practice Note 17 (PN17) status generic drug maker also proposed to undertake a capital reduction that entails the reduction and cancellation of RM180 million of its issued share capital to reduce the accumulated losses of Pharmaniaga and its subsidiaries. 

The group’s accumulated losses amounted to RM463.7 million and its capital deficiency was at RM238.7 million as as at Sept 30.   

The renounceable rights issue will be on the basis of four rights shares for every five existing shares held. The rights issue is sweetened by free warrants, which will be issued on the basis of one warrant for every rights share subscribed for entitled shareholders.

In addition, Pharmaniaga will be issuing up to 714.29 million new shares, equivalent to 26.9% of issued share capital of 1.44 billion shares — to place out to third-party investors to be identified later. The issue price will be determined later.

Based on an illustrative price of 30 sen, a discount of 28.62% to the five-day volume weighted average price of Pharmaniaga shares up to and including Nov 15 of 42.03 sen per share, the group expects to raise up to RM654.61 million from both renounceable right shares and the private placement 

Pharmaniaga will allocate RM263.9 million to repay its existing borrowing, while RM222 million to be kept for business expansion, RM159.9 million for working capital, and the remaining RM8.81 million will defray the exercise’s estimated expenses.