KUALA LUMPUR (April 5): Loss-making oil bunkering services provider Fast Energy Holdings Berhad has emerged as a substantial shareholder in Vsolar Group Bhd after subscribing to 140 million shares in Vsolar’s rights issue exercise for RM14 million, or 10 sen apiece.

The right issue subscription has resulted in Fast Energy owning a 28.15% stake in Vsolar, which is involved in renewable energy, media publishing, software solutions and production house businesses, according to Fast Energy’s stock exchange disclosure on Friday.

This is potentially the single-largest shareholding block in Vsolar after its rights issue, but the group has not disclosed all the shareholding changes arising from the corporate exercise thus far.

The only shareholding change disclosed on Friday was in relation to Vsolar executive director Koo Kien Yoon, who subscribed to 75 million shares, raising his stake to 15.1%, up from just 0.01% previously.

Koo was the only one who provided an undertaking to Vsolar’s rights issue. AE Multi Holdings Bhd, the single-largest shareholder of Vsolar prior to the corporate exercise, did not provide any undertakings.

The new issuances under Vsolar’s rights issue totaled some 336.09 million shares, far below the 644.63 million rights shares available for subscription, translating to an under-subscription of 47.86%.

The rights issue raised Vsolar’s total share capital to about 497.3 million shares, and if AE Multi Holdings shareholdings remains unchanged, it would have been diluted to just 5.9% based on back-of-envelope calculations.

Priced at 10 sen apiece, Vsolar’s rights issue has raised some RM33.61 million for the group, which will be utilised to fund its solar photovoltaic leasing projects and railway business working capital.

Separately, Fast Energy told Bursa Malaysia on Friday that investing in Vsolar allows it to “capitalise on this trend and benefit from the long-term growth potential of the renewable energy sector”.

Fast Energy said the move is also in line with its “mission in expanding its existing green energy business and increasing its income stream from such business”.

Note that last month, Fast Energy itself concluded its own rights issue exercise, raising some RM19.4 million based on nine sen apiece. It intended to allocate between 71% and 97% of the proceeds raised for working capital, while the remaining would go towards expenses for the corporate exercise.

Fast Energy was of the view that it would strengthen its financial position and capital base by reducing its gearing level and increasing its net assets.

Fast Energy also proposed to diversify its principal activities to include the wholesale, distribution and retail of consumer electronics goods. The plan was approved by its shareholders last October.

For the financial year ended Dec 31, 2023 (FY2023), Fast Energy’s cash and bank balances, including fixed deposits, stood at RM14.17 million, higher than the RM9.6 million as at FY2022.

Borrowings were rather steady during the same period, at RM4.7 million as at FY2023 against RM4.06 million as at FY2022.

The group’s net loss widened by over four times to RM18.65 million for FY2023, from RM4.5 million for FY2022, despite revenue growing 47% to RM398.92 million from RM272.05 million.

Meanwhile, Vsolar posted a net profit of RM180,000 for the six-month period ended Dec 31, 2023 (1HFY2024), as compared to a net loss of RM10.03 million in 1HFY2023. Revenue came in at RM4.95 million, 4.52% higher than RM4.74 million in the same period a year ago.

Apart from the newly concluded rights issue, Vsolar has conducted several fund raising exercises in the past few years, including a rights issue exercise back in July 2020 as well as private placements in November 2020, January 2021 and June 2021.

While these fundraising exercises were completed raising a total of RM68.14 million, the bulk of the proceeds, amounting to RM60.02 million, have not been utilised just yet. (see table)

Interestingly, these unutilised proceeds are larger than Vsolar’s current cash coffer. As at Dec 31, 2023, its cash and bank balances including fixed deposits stood at approximately RM25.22 million, versus RM25.66 million a year ago.

Nonetheless, it is worth noting that more than half of Vsolar’s total assets are RM51.35 million worth of “other investments” parked under its non-current assets list.

According to Vsolar’s latest annual report, the group’s “other investments” were mainly “quoted investments” and “unquoted investments”.

Shares of Fast Energy closed half a sen or 7.14% lower to 6.5 sen, giving the group a market capitalisation of RM27.99 million.

Meanwhile, Vsolar’s share price settled unchanged at 10 sen, valuing the group at RM49.73 million.