KUALA LUMPUR (Oct 4): Privately owned rail construction company Dhaya Maju Infrastructure (Asia) Sdn Bhd is taking up a 57.52% stake in Pestech International Bhd (KL:PESTECH) for RM160 million through a restricted issue.
In a filing to Bursa Malaysia on Friday, Pestech announced that it had entered into a conditional subscription agreement with Dhaya Maju for the subscription of 1.34 billion restricted shares at 12 sen apiece, totalling RM160 million.
On Aug 16, Pestech and Dhaya Maju had signed a heads of agreement (HOA), under which Dhaya Maju was to acquire up to a 51% stake in the electrical engineering firm at 15.5 sen per share, amounting to approximately RM160.07 million.
This HOA followed the termination of a previous agreement in which construction giant IJM Corp Bhd (KL:IJM) had planned to acquire a 44.83% stake in Pestech for RM124 million. That deal was called off due to unmet conditions.
Notably, Pestech is currently in a joint venture with IJM Construction Bhd and Alstom Transport Systems (Malaysia) Sdn Bhd to undertake the upgrading of the aerotrain project at Kuala Lumpur International Airport.
In the latest subscription agreement, Pestech stated it will "supersede all the terms and conditions" agreed upon in the earlier HOA.
The subscription price of 12 sen per share represents a discount of approximately 2.1 sen, or 14.95%, to the five-day volume-weighted average price, which both parties deemed "reasonable", according to Pestech.
Upon completion of the subscription agreement, Dhaya Maju will become the largest shareholder of Pestech, holding 57.52%, while Pestech's current largest shareholder and executive chairman Lim Ah Hock will see his shareholding reduced to just over 9%.
Nevertheless, Dhaya Maju and the parties acting in concert intend to apply to the Securities Commission Malaysia for an exemption from the obligation to undertake a mandatory general offer.
Of the RM160 million proceeds, Pestech plans to utilise RM82 million for working capital, as well as RM60 million for bank loan repayments, and the remaining RM17 million for operational requirements.
Dhaya Maju is mainly involved in the engineering, procurement, construction and commissioning of railways and highways, railway engineering and technology and real estate development. The company is better known as the main contractor for the Klang Valley Electrified Double Track project.
Capitalisation exercise if subscription agreement conditions are unmet
In the event that certain conditions of the subscription agreement are not met, or if either party terminates the agreement, Pestech said it will capitalise the 10% deposit paid by Dhaya Maju by converting it into issued shares.
The proposed capitalisation involves converting the RM16 million deposit into shares at an issue price of 12 sen per share. These capitalisation shares would represent approximately 11.93% of Pestech’s enlarged share base after the capitalisation.
"We believe the proposed capitalisation is not detrimental to the interests of existing shareholders," Pestech noted, adding that the deposit will be used for the group's day-to-day working capital needs.
Subject to obtaining all relevant approvals and consents, and barring any unforeseen circumstances, Pestech anticipates to complete the corporate exercise by the first quarter of 2025.
Shares in Pestech settled 1.5 sen, or 11.54%, higher at 14 sen on Friday, giving it a market capitalisation of RM137.88 million.