This article first appeared in The Edge Malaysia Weekly on March 18, 2024 - March 24, 2024

Earlier this month, VSolar Group Bhd announced a proposal to issue up to 644.63 million rights shares with up to 322.32 million warrants at an issue price of 10 sen per rights share, on the basis of four rights shares and two warrants for every one VSolar share held.

VSolar in its prospectus said it is looking to raise anywhere between RM7.5 million RM64.46 million from the rights issue to be utilised largely for its solar photovoltaic and railway businesses. The warrants conversion at 10 sen will also translate to additional funds for VSolar.

In another segment of the prospectus, other fundraising exercises of VSolar over the past five years were highlighted.

VSolar had undertaken three private placements — in June 2021, raising RM14.71 million by issuing 476.21 million shares; in January 2021, issuing 245.19 million shares and raising RM9.27 million; and in November 2020, issuing 210.16 million shares and raising RM7.19 million. In July 2020, VSolar via a rights issue with warrants quoted 1.23 billion rights shares and 821.66 million warrants on the ACE Market of Bursa Malaysia, raising RM36.97 million.

Prior to July 2020, there were many instances where additional shares were issued as well.

To put things in perspective, in September 2019, VSolar’s share base was only 386.07 million shares, but ballooned to 4.83 billion by May 2023. Then in May last year, the company consolidated 4.83 billion shares to 161.16 million in a 30 for one consolidation.

Despite the large number of share issuances, and the manoeuvring, VSolar has been loss-making for the past 10 financial years. So what is all the money raised being utilised for?

And this is just a cursory look at the placements and rights issues, for the company’s Employees Share Option Schemes or ESOS go into the billions of shares as well.

A change in tack seems necessary at VSolar.

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