KUALA LUMPUR (Feb 27): Unitrade Industries Bhd is looking to raise RM42.19 million via a private placement of 10% of its enlarged share base to repay its bank borrowings and partly fund the construction of centralised labour quarters (CLQs) that it plans to rent out as workers' accommodation.

The ACE Market-listed building material wholesaler and distributor plans to issue up to 156.25 million shares to independent third parties at an issue price to be determined and fixed, according to the group’s bourse filing on Tuesday.

Based on an indicative issue price of 27 sen per share, a 7.5% discount to the five-day volume-weighted average market price up to and including Feb 26 of 29.18 sen per share, the exercise is expected to raise up to RM42.19 million.

The bulk RM29.19 million is to go towards the repayment of bank borrowings, followed by RM12 million for the construction of CLQs, with the remaining RM1 million for defraying the private placement’s expenses.

Unitrade said the private placement would enable the group to raise funds more expeditiously and in a more cost-effective manner as opposed to other fundraising options.

On the CLQs, Unitrade said it plans to construct them on an 87,213 sq ft parcel of land, which it has identified but yet to acquire. The group ventured into the provision of rental of modular housing to its customers to rent for their workers back in August 2022.

The CLQs project is expected to cost RM18.7 million, with the balance RM6.7 million not funded by the private placement to be financed by bank borrowings.

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

M&A Securities Sdn Bhd has been appointed as the placement agency for the private placement exercise.

Shares in Unitrade ended unchanged at 29.5 sen, giving the company a market capitalisation of RM453.26 million.