KUALA LUMPUR (Nov 4): Khee San Bhd (KL:KHEESAN) has signed an underwriting agreement with M&A Securities Sdn Bhd, Kenanga Investment Bank Bhd (KL:KENANGA) and Malacca Securities Sdn Bhd for the candy maker’s upcoming rights issue with warrants. M&A is also the principal advisor for the exercise.
The rights shares are fixed at 10 sen each. The exercise is expected to raise RM65 million on a minimum subscription rate and up to RM96.1 million under the maximum scenario. Khee San shares settled half a sen or 2% higher at 25.5 sen on Monday, valuing the group at RM35.01 million.
The joint underwriters will underwrite a total of 489.84 million rights shares that amount to about RM48.98 million. This underwriting, together with the undertaking provided by its undertaking shareholder to subscribe for 160.16 million rights shares that amount to RM16.02 million, will allow Khee San to achieve the minimum subscription level of RM65 million under the cash call, Khee San said in a bourse filing Monday.
“This represents a significant step in Khee San's strategic plan to strengthen its financial position and enhance prospects for sustained growth,” the Practice Note 17 (PN17) company said in a separate statement on Monday.
Khee San, whose share price has risen 82% year-to-date, had on Oct 21 obtained its shareholders’ approval for the rights issue of up to 960.96 million shares and up to 549.12 million warrants on the basis of four warrants for every seven rights shares subscribed.
“Proceeds from the rights issue will be strategically invested to drive Khee San’s growth trajectory across both domestic and export markets,” it said. “Khee San aims to use the funds to increase production capacity through new high-speed manufacturing lines, which will support rising demand and improve operational efficiency,” it added.
The company also intends to expand its reach in key international markets, including New Zealand, Mauritius and Taiwan, by strengthening its distribution network and growing its portfolio to include new innovative products.
The regularisation plan is expected to solidify Khee San's cash reserves, maintain its zero debt levels, accelerate market expansion and implement an employee share scheme to attract and retain talent, it added.
For the financial year ended June 30, 2024 (FY2024), Khee San’s net profit dropped 54.58% to RM783,914 versus RM1.73 million in FY2023 as revenue fell 5.93% to RM52.3 million from RM55.6 million. The lower earnings was mainly due to lower sales orders from the export market, as well as lower gross profit dragged by higher distribution costs and administrative expenses, the company said in its latest financial statement.