KUALA LUMPUR (March 15): Microlink Solutions Bhd said it plans to raise up to RM89.37 million via a rights issue of redeemable preference shares (RPS) with detachable warrants to repay its bank borrowings and finance working capital.
Under the proposal, the software solutions provider will issue up to 89.37 million RPS at RM1 per share, together with 268.1 million new free warrants on the basis of one RPS and three warrants for every 12 existing shares.
The tenure of the RPS is five years and it has a dividend rate of 6% per annum based on the issue price, the group said in a bourse filing on Friday.
Microlink said the issue price of RM1 represents a premium of 127.74% to the five-day volume weighted average market price of the group’s shares of 43.91 sen on Thursday.
The group has fixed the exercise price of the warrants at 36 sen per warrant. The warrants’ tenure is also five years.
Based on the issue price of RM1 per RPS, Microlink is expected to raise RM89.37 million. Of this, RM36.07 million will be used to repay borrowings and RM49.46 million for working capital. The balance RM3.84 million will go towards defraying the expenses of the corporate exercise.
Microlink’s bank borrowings stood at RM42.72 million as at end-December 2023.
The group said the cash call, which is expected to be completed in the second half of 2024, is subject to shareholders’ approval at an extraordinary general meeting to be convened.
Microlink received an unusual market activity (UMA) query from Bursa Malaysia on March 11 after its shares hit a limit down of 53 sen, marking its lowest since November 2021.
Responding to the query, Microlink said it is not aware of any corporate development relating to the group’s business that has not been previously announced.
On Friday, Microlink's share price settled unchanged at 42 sen, giving the group a market capitalisation of RM450 million.
Microlink is 9.9% owned by the Sultan of Pahang, Al-Sultan Abdullah Sultan Ahmad Shah. He is the third largest shareholder after Omesti Bhd (34.3%) and Kenanga Islamic Absolute Return Fund (22.1%).
The group recently reported a RM3.37 million net loss for the third quarter ended Dec 31, 2023, its first quarterly loss in four years. Quarterly revenue shrank to RM69.58 million from RM73.17 million a year ago, mainly attributable to lower order fulfilments and progress billings particularly in financial services and enterprise solutions segments.
For the first nine months of the year, the group saw its net profit decline 98% to RM467,000 year-on-year from RM21.5 million, despite revenue growing 12% to RM204.05 million from RM183.03 million.