KUALA LUMPUR (Feb 23): Boustead Holdings Bhd, which has provided irrevocable undertaking for the rights issue of Pharmaniaga Holdings Bhd, has provided assurance that it has adequate resources to meet its undertaking obligations, Pharmaniaga said.
The group is subscribing for up to RM163 million of the estimated RM354.6 million rights issue, based on its shareholding of 47.1% in the Practice Note 17 (PN17) pharmaceutical outfit.
Boustead may also take on the portion of rights issue belonging to the Armed Forces Fund Board (LTAT), of up to RM27.1 million, if the latter does not subscribe in full its entitlement, Pharmaniaga said in a filing on Feb 19.
LTAT owns 100% in Boustead, and 7.1% in Pharmaniaga. In total, Boustead and LTAT are illustrated to subscribe up to RM190.1 million of the rights issue, which comes with a one-for-one free warrant.
“Boustead have confirmed, vide its letter dated Feb 19, 2024, that it has sufficient financial resources to fulfil its obligation under the shareholders’ undertaking and MIDF Investment, being the principal adviser for the proposed rights issue with warrants, has verified the said confirmation,” it said.
“In the event that LTAT does not subscribe in full for its entitlement, LTAT may assign the unsubscribed portion to Boustead to ensure that the entitlement for LTAT and Boustead are fully subscribed,” it said.
Initially, both Boustead and LTAT had provided the undertaking for Pharmaniaga’s rights issue, which is part of its regularisation plan announced in November 2023.
Amid a revision of the regularisation plan was announced on Feb 19, Pharmaniaga received a new undertaking from Boustead. It is currently procuring the same from LTAT.
Pharmaniaga Bhd has submitted an application to Bursa Securities to revise the fund-raising exercise, the pharmaceutical group said in its filing on Friday.
The revision, among others, fixed up to RM354.6 million in funds to be raised from the rights issue, and did not fix the number of shares to be issued. An earlier proposal underlined a one-for-one rights issue.
“This [revision] is to provide flexibility to the board in respect of the entitlement basis and pricing of the rights shares,” it said earlier on Feb 19.
The latest revision also underlined gross proceeds of up to RM300 million for a private placement exercise. It previously proposed a private placement of approximately 26.9% of Pharmaniaga’s enlarged share capital post-rights issue.
In total, Pharmaniaga is seeking to raise up to RM654.6 million from the rights issue and private placement — unchanged from the previous announcement. A proposed capital reduction of RM180 million is similarly unchanged.
The group had negative total equity of RM238.77 million at end-September 2023, and borrowings of RM1.275 billion as at end-January.
Higher portion to pay off debt
On the private placement, Pharmaniaga said the placement shares will be priced higher than the rights shares, in view that the private placement subscribers will be new shareholders.
Pharmaniaga has also raised its fundraising portion for borrowing repayment to RM335 million, from RM263.9 million announced back in November. This will save it RM15.7 million in interest payment per annum at a rate of 4.7%, it said.
The working capital portion is reduced to a maximum of RM88.7 million, from RM159.9 million. A total of RM222 million will be used for expansion, which is unchanged from the initial proposal.
Pharmaniaga fell into PN17 last year, after booking a loss of RM607.32 million in the financial year ended Dec 31, 2022 (FY2022), on the back of RM552.3 million impairment of Covid-19 vaccines.
It also undertook a RM44.2 million placement last year to pay suppliers and creditors, which is not part of the regularisation plan.
Last month, it announced a seven-year extension to its concession agreement with the health ministry to provide medical supply logistics.
After Boustead and LTAT, Pharmaniaga’s third largest shareholder is East Navigators Capital Ltd, with a 6% stake.
Pharmaniaga had a share base of 1.441 billion shares, with 36.32 million outstanding options convertible to ordinary shares.
The counter settled half a sen or 1.57% higher to close at 40 sen, giving it a market capitalisation of RM569.29 million. The counter is up 3.9% this year.