KUALA LUMPUR (July 12): Nestcon Bhd (KL:NESTCON) aims to raise RM27.27 million through a private placement of 70.82 million shares or 10% of its enlarged share base.
A total of RM22 million of the gross proceeds will be allocated to repaying its bank borrowings. Another RM4.58 million will be used for working capital in construction projects, as well as for engineering, procurement, construction and commissioning (EPCC) of solar photovoltaic (PV) projects.
The remaining RM685,000 will cover estimated expenses related to the proposed private placement.
As of June 28, the group reported total borrowings of RM262.86 million, with RM221.33 million classified as short-term and RM41.53 million as long-term, according to its stock exchange filing on Friday.
The issue price is assumed to be 38.5 sen, representing a discount of approximately 8.85% to the five-day volume-weighted average market price of Nestcon shares up to June 28, which was 42.24 sen.
Nestcon is principally involved in the provision of construction services, and engineering, procurement, construction and commissioning of solar PV projects, project management of renewable energy activities as well as owning and operating solar PV assets.
“The construction industry in Malaysia has been challenging in recent years due to the rising cost of construction materials and higher labor costs, which increased the group’s construction costs,” said the group.
“Notwithstanding the challenging business environment, the board is cautiously optimistic of the group’s prospects moving forward given the positive economic outlook of the construction industry and renewable energy industry in Malaysia,” it added.
The proposed private placement is expected to be completed by the first quarter of 2025, with M&A Securities Sdn Bhd appointed as the adviser and placement agent for the exercise.
In late January, Nestcon completed a private placement of 64.38 million new shares, raising total gross proceeds of approximately RM23.18 million.
Shares of Nestcon closed up half a sen or 1.19% at 42.5 sen on Friday, giving it a market capitalisation of RM300.99 million.