GFM Services intends to raise RM14.8 mil via private placement for working capital

Friday 10 May 2024

KUALA LUMPUR (Feb 19): Integrated facilities management group GFM Services Bhd is looking to raise RM14.78 million via a private placement of 69.05 million shares or 10% of its enlarged share base.

According to a bourse filing on Monday (Feb 19), proceeds to be raised will go towards funding work capital and the purchase of machinery for the maintenance works, turnarounds and shutdowns of oil and gas (O&G) processing plants in Pengerang, Johor.

GFM said the O&G service works come under an Integrated Turnaround Main Mechanical and Maintenance Mechanical Static (TA4MS) contract Petronas awarded to its wholly-owned unit Highbase Strategic Sdn Bhd’s (HSSB) joint venture with Singapore-based O&G integrated solutions provider Mun Siong Engineering Ltd (MSEL).

HSSB owns a 51% stake in the HSSB-MSEL joint venture.

The five-year TA4MS contract, which holds an estimated value of RM247.5 million, was awarded to the joint venture in 2019 and is equipped with options for Petronas to extend the job for up to another five years.

“As such, the board opines that the awarded TA4MS contract, and its potential extension by Petronas, provides a long-term and sustainable opportunity for the group’s business,” GFM added.

Assuming the placement shares are issued at an illustrative price of 21.4 sen, a 9.89% discount to the five-day volume-weighted average price of GFM shares up to Feb 16 of 23.75 sen, the company would raise RMRM14.78 million.

GFM reasoned that the private placement would enable the company to raise additional funds more expeditiously and in a more cost-effective manner compared to other fund-raising options.

Subject to requisite approval, the private placement is expected to be completed in the first half of 2024.

UOB Kay Hian has been appointed as the adviser and placement agent for the private placement exercise.

GFM previously owned a 49% stake in HSSB but acquired the remaining 51% for RM18.22 million from Noor Jasni Zakaria and Norliza Mohd on November 30, 2023.

Shares in GFM ended unchanged at 24.5 sen, valuing the group at RM165.78 million.