KUALA LUMPUR (Sept 24): Digistar Corp Bhd (KL:DIGISTA) is looking to raise up to RM9 million via a private placement of 30% of its share base to fund its new pay-TV venture and repay bank borrowings.
Digistar has undertaken various fund-raising exercises since 2016, collectively raising approximately RM36.91 million to support the group’s operational growth, strengthen the capital base and lower its gearing ratio.
The latest private placement exercise involves the issuance of up to 169.99 million new shares, which will be placed out to third-party investors and LWC Capital Sdn Bhd, said the loss-making group in the bourse filing.
Some 20% of its issued share capital or 113.32 million placement shares shall be placed out to third-party investors to be identified later.
LWC Capital, an investment vehicle of Digistar’s managing director Datuk Lee Wah Chong, will subscribe up to 56.66 million placement shares or 10% of the issued share capital. LWC Capital currently holds a 26.72% stake in Digistar.
The bulk of the proceeds from the private placement, or RM8.6 million, is for business expansion on the provision of internet television services segment. Of that, RM3.8 million will go towards purchasing android television boxes, RM1.8 million to purchasing and subscribing to new contents, RM1.5 million for marketing campaigns and RM1.5 million to hiring new workforce.
Meanwhile, another RM230,000 will be used to repay bank borrowings and RM180,000 to defray placement expenses.
The group announced its pay-TV foray earlier this year through a collaboration with MNC group. It will be conducted by its 60%-owned Panorama TV Asia Broadcast Sdn Bhd.
As at June 30, 2024, the group’s total bank borrowings amounted to RM7.5 million, of which RM2.48 million are short-term borrowings.
Currently, Digistar's major earnings contributors are its construction and concession, as well as hospitality segments. It owns and operates the Imperial Heritage Hotel and Orchard Wellness resort in Melaka.
In the nine months ended June 30, 2024 (9MFY2024), the group’s net loss widened to RM3.45 million from RM476,000 in the same period a year ago, while revenue declined 5.13% to RM34.37 million from RM36.23 million previously.
Digistar’s share price closed up 0.5 sen or 10% to 5.5 sen on Tuesday, bringing the group a market capitalisation of RM26 million.