KUALA LUMPUR (July 2): G Capital Bhd (KL:GCAP) has decided to scrap its planned rights issue of redeemable convertible unsecured loan stocks (RCULS) due to unfavourable market conditions.
“On behalf of the board, KAF Investment Bank wishes to announce that, after due consideration of the downward trend of the market prices of GCAP shares since the announcement of the rights issue on 5 April 2023, the board had resolved not to proceed with the rights issue,” according to the company’s filing with Bursa Malaysia on Tuesday.
However, the company said it intends to explore alternative funding options for its mini-hydropower plant projects in Perak. The decision to cancel the rights issue is not anticipated to have any material effect on GCAP’s earnings or net assets, it said.
The proposed rights issue aimed to raise RM112.8 million by issuing 1.41 billion RCULS at a nominal value of eight sen each. The RCULS, with a five-year tenure, were to be offered at a ratio of four RCULS for one existing ordinary share.
The funds raised from the rights issue were earmarked for financing GCAP's 20 megawatts (MW) mini-hydropower plants in Perak, as well as its working capital.
G Capital Bhd executive director Datuk Yap Yee Ping had April 2023 said that the mini-hydropower projects, estimated to cost RM335 million, are situated in Sg Perak, Salu-A; Sg Temelong and Sg Ibol; and Sg Geroh.
According to Yap, these projects are expected to generate RM653 million in revenue over a period of 21 years through the company’s renewable energy power purchase agreements with Tenaga Nasional Bhd (KL:TENAGA).
As of end-March this year, GCAP had borrowings totalling RM47.98 million, with RM3.1 million classified as short-term and RM44.88 million as long-term. Meanwhile, the company's cash and bank balances amounted to RM1.003 million. Its accumulated losses stood at RM32.07 million.
GCAP, which started off in the land-based fleet chartering business, diversified into the renewable energy business consisting of small hydro power plants and solar power by acquiring an equity stake in companies with existing RE businesses. It also has a water solutions provider business.
Nevertheless, the bulk of its revenue is still derived from its fleet chartering operations.
GCAP unit completes installation of 2,000 kWP solar PV system
In a separate filing with the stock exchange, GCAP said its 70%-owned unit Solarcity Malaysia Sdn Bhd has successfully installed and commenced operations of a 2,000 kWP solar photovoltaic electric power generation system in Bukit Mertajam, Penang.
Solarcity had previously entered into a power purchase agreement with Chin Herr Industries (M) Sdn Bhd, a wholly-owned subsidiary of Chin Well Holdings Bhd (KL:CHINWEL).
According to GCAP, the solar PV system is situated at No 1500, MK11 Lorong Perusahaan Utama 1, Bukit Tengah Industrial Estate, Bukit Mertajam. It is expected to contribute revenue and earnings to the company over a period of 25 years starting from July 2, 2024, the commercial operation date.
Shares of GCAP, which have fallen over 21% in the past year, closed unchanged at 36 sen on Tuesday. This gives the company a market capitalisation of RM118.04 million.