KUALA LUMPUR (Oct 10): Ge-Shen Corp Bhd (KL:GESHEN) has proposed to raise up to RM103.76 million through two private placements, part of which will go towards acquiring a 40% stake in electronic manufacturing services (EMS) company Local Assembly Sdn Bhd, raising its interest to 80%.
The plastic injection moulding and metal stamping company-turned-EMS player said in a bourse filing on Friday that the first placement entails up to 41.4 million new shares, or not more than 10% of its issued share capital, to third-party investors at a price to be determined later.
Assuming an issue price of RM1.45 per share — a 9.41% discount to its five-day volume-weighted average price of RM1.6007 as at Sept 26 (the latest practicable date or LPD) — the exercise is expected to raise gross proceeds of up to RM60.02 million, mainly for working capital and repayment of bank borrowings.
As at the LPD, the group’s bank borrowings stood at RM113.53 million, including term loan, revolving credit, overdraft and lease liabilities.
The second placement will involve up to 30.16 million new shares, representing not more than 6.5% of its issued shares. Based on the same assumed issue price of RM1.45 per share, Ge-Shen is expected to raise RM43.74 million, of which RM39 million (89.18%) will go towards funding the 40% stake purchase.
The purchase consideration of RM52 million for the 40% stake in Local Assembly — from Chai Voon Sun, Gurmakh Singh Ajmer Singh, Wee Thian Song and Divine Inventions Sdn Bhd — will be partly satisfied with cash and the issuance of 8.66 million new Ge-Shen shares at RM1.50 each, amounting to RM13 million.
“The proposed acquisition is expected to strengthen Ge-Shen’s foothold in the EMS industry and enable the group to capitalise on growth opportunities in Malaysia’s EMS market,” the company said.
Both the private placements and the acquisition are targeted for completion by the first quarter of 2026.
Shares of Ge Shen closed down one sen or 0.63% at RM1.59 on Friday, giving it a market capitalisation of RM642.55 million. The counter, however, has risen over 21% year to date.