KUALA LUMPUR (Oct 8): UWC Bhd (KL:UWC) has dropped its plan to use part of the proceeds of its newly proposed RM384.13 million private placement to pay off borrowings, choosing instead to redirect the amount towards factory expansion and working capital.
In a bourse filing Thursday, Maybank Investment Bank, on behalf of the group, said this will involve the allocation of RM80.46 million originally earmarked for debt repayment.
This will result in RM230.13 million or roughly 60% of the proceeds it expects to be raised from the placement to be used for the expansion of its existing manufacturing facility within 24 months — up from RM200 million originally.
The working capital portion will rise to RM150.43 million from RM100.09 million, while the remainder will be used to defray the placement's expenses.
The about-turn comes two days after UWC first announced the private placement on Tuesday, which will involve the issuance of up to 55.19 million shares or 5% of its issued share base. The placement marks its first equity fund-raising exercise since the group's listing in 2019.
UWC said the expansion will allow it to transition from supplying components to a full equipment manufacturer for an existing wafer fab customer, which will broaden its manufacturing responsibilities and deepen its participation in the semiconductor equipment value chain.
"The proposed placement will support the capacity and capabilities required for the UWC group to execute this manufacturing transfer, including investments in production facilities, machinery and assembly infrastructure, together with the associated working capital requirements," it said.
The expected proceeds from the placement is based on an assumed price of RM6.96 per share. The stock closed at RM7.99 on Thursday, valuing the group at RM8.82 billion.
The group previously said its bank borrowings stood at RM105.23 million as at Sept 30. While this will be retained, the fresh equity injection will result in the group's estimated gearing to drop to 0.12 times from 0.22 times, while net assets per share will rise to 74 sen from 43 sen.
Its share price has rallied over 80% this year, thanks to robust earnings growth driven by the artificial intelligence boom that has triggered a surge in demand for wafer fabrication equipment.
The group concluded its financial year ended July 31, 2026 (FY2026) with record profits and revenue. Net profit surged 131.7% to RM93.84 million from RM40.51 million in FY2025, as revenue jumped 54.1% to RM594.89 million from RM386.18 million.