KUALA LUMPUR (Feb 7): Theta Edge Bhd (KL:THETA) is raising up to RM46.01 million through the issuance of 35.39 million new shares to Threadstone Capital Sdn Bhd, a private limited company controlled by its non-independent non-executive director Zainal 'Abidin Abd Jalil.

Threadstone Capital currently holds an 8.48% stake in Theta Edge. Following the completion of the exercise, Threadstone Capital’s stake will rise to 29.6%, making it the largest shareholder in the group.

The shareholding of the current largest shareholder, Lembaga Tabung Haji, will be diluted from 27.28% to 20.98% following the completion of the share issuance.

The subscription price for the new shares has been set at RM1.30 per share, representing a 6.82% discount to the five-day volume-weighted average price of RM1.3951 as of Feb 6, according to Theta Edge's filing with Bursa Malaysia on Friday.

Of the RM46.01 million proceeds, Theta Edge has allocated RM18 million towards general working capital, including payment to suppliers and staff-related expenses, and another RM16 million for future business expansion and viable investments in the information and communications technology (ICT) and telecommunications sectors.

Approximately RM11.5 million will be directed towards operational expenses for existing projects, particularly the MPAJ Smart City Project and the Unifi Cloud-Based Playout Project.

Theta Edge has earmarked RM8.2 million from the proceeds for its 20-year concession MPAJ Smart City Project in Ampang Jaya. This initiative involves the development and deployment of Internet of Things-based digital infrastructure to enhance urban management and public services.

Additionally, RM3.3 million will fund key components of the Unifi Cloud-Based Playout Project for TM Technologies Services Sdn Bhd, supporting cloud playout systems, professional services, and security solutions for Unifi TV channels.

Theta Edge said the proposed subscription is a strategic move to strengthen the group’s financial position without incurring debt.

It noted that raising funds through this exercise avoids the burden of interest costs associated with bank borrowings and provides the financial flexibility needed for operational requirements and project execution.

Despite recent financial challenges stemming from contract completions under the Jendela 1 initiative, Theta Edge remains optimistic about its prospects.

"The company has optimised costs and is now concentrating on its flagship 20-year Smart City concession for Ampang Jaya (ie MPAJ Smart City Project). This ambitious project highlights the company's commitment to leverage technology to create sustainable urban solutions and unlock new revenue streams," it said.

"The MPAJ Smart City Project is a landmark project that showcases the company's capacity to deliver large-scale, technologically advanced urban solutions," Theta Edge added.

The group also highlighted plans to explore further strategic partnerships and viable investments, particularly in ICT, telecommunications, and green energy sectors, to drive long-term growth.

The proposed share subscription is subject to shareholder and regulatory approvals, including Bursa Malaysia’s consent for the listing and quotation of the new shares. The exercise is expected to be completed by the second quarter of 2025.

UOB Kay Hian Securities (M) Sdn Bhd is acting as the adviser and placement agent for the exercise.