KUALA LUMPUR (Oct 14): Southern Cable Group Bhd (KL:SCGBHD), whose share price has almost doubled so far this year, is planning to raise up to RM259.2 million by placing out up to 10% of its enlarged share base, to finance capital expenditure, expansion, and working capital.
The proposed exercise will involve the issuance of up to 120 million new shares, a bourse filing showed on Tuesday.
The estimated proceeds are based on an illustrative price of RM2.16 per share — which is 10% lower than the stock's five-day volume-weighted average price of RM2.3977 — as the final price is not fixed yet.
The group wants to boost its annual cable and wire output by 25%, and to triple its aluminium rod production, to meet growing demand across various sectors, including power utilities, renewable energy, and construction. These expansions will be carried out in stages and are slated for completion by the end of 2027, the group added.
“To achieve our long-term growth aspirations, we are also increasing our overseas revenue, with a target for it to contribute 30% of total revenue within the next three years,” said managing director Tung Eng Hai.
“The funds raised will strengthen our manufacturing capabilities and support our vision of becoming a leading integrated cables and wires manufacturer in the region.”
Of the proceeds, RM129 million will be earmarked for capex and expansion. This includes construction and renovation works adjacent to the group’s existing operations in Kuala Ketil, Kedah, the acquisition of a warehouse, and the purchase of new machinery.
Separately, RM5.1 million will be used to settle the balance purchase price and related expenses for an industrial land acquired in July.
The remaining proceeds will be primarily allocated to working capital, which includes purchasing raw materials such as copper, aluminium, and plastic compounds.
A portion will also be used to repay borrowings and cover estimated expenses related to the placement. As of the end of June, the cable manufacturer held cash reserves of RM143.54 million and total borrowings amounting to RM276.49 million.
Southern Cable previously raised RM27.49 million in the financial year ended Dec 31, 2024 (FY2024) and RM18.5 million in the first half of FY2025 through warrant conversions, in tandem with its strong share price performance.
RHB Investment Bank Bhd is the principal adviser and sole placement agent for the proposed private placement.
At Tuesday’s close, Southern Cable shares settled three sen or 1.4% lower at RM2.17, valuing the group at RM2.22 billion.