Zecon Berhad has proposed to raise capital of between RM19.4 million to RM46.1 million through a rights issue to meet its short term obligations and liabilities as well as strengthen its financial position.
Under the proposal, the Sarawak-based construction and property firm plans to make a renounceable rights issue of up to 576.4 million of irredeemable convertible preference shares (ICPS) at an issue price of RM0.08 each and a conversion rate of RM0.16. Each shareholder who already owns one Zecon share will receive four ICPS shares. Shareholders who opt to subscribe to the ICPS will provide entitled shareholders with the opportunity to further increase their equity participation in the firm.
According to Zecon, the entitlement date will be determined later. As the ICPS will be listed and traded on the main market of Bursa Securities, depending on the future performance of the group, shareholders may be able to benefit from future capital appreciation of the ICPS.
“A total of RM26.2 million will be spent on working capital (maximum scenario) or RM3.4 million (minimum scenario) within the next 6 months,” the firm said. Similarly, RM5.4 million will be spent on the partial repayment of bank borrowings (maximum scenario) or RM3.6 million (minimum scenario) within the next 3 months while another RM700,000 will be spent for listing expenses.
Zecon’s net profit surged 59.7 per cent to RM9.15 million in its third quarter ended March 31 from RM5.73 million in the same comparable quarter a year ago mainly attributed by the Hospital Kanak-Kanak Universiti Kebangsaan Malaysia and the Pan Borneo projects.
The company had also proposed the establishment of an employees’ share option scheme (ESOS) of up to 15 percent of total number of issued shares of Zecon to recognise and reward eligible persons. The objective is to motivate eligible staff to improve performance through greater productivity as well as to inculcate a greater sense of belonging and dedication as the eligible persons are given the opportunity to own equity in the company.
Furthermore, the company had also proposed amendments to the constitution of the company to facilitate the proposed rights issue of the ICPS.