The new shares will be placed out to third-party investors to be identified later and at an issue price to be determined.
In a filing with Bursa Malaysia today, the pharmaceutical group said the exercise shall be undertaken in accordance with the general mandate which was approved by its shareholders at its 25th Annual General Meeting held on June 12.
The group slipped into the Practice Note 17 (PN17) status on Feb 27 this year, after booking provisions of RM552.3 million for unsold Covid-19 vaccines which resulted in negative equity in its balance sheet. Its capital deficiency stood at RM119.19 million, according to an earlier filing.
Its largest shareholder is Boustead Holdings Bhd, which has a 52% stake. Boustead is being taken private by the Armed Forces Fund (LTAT), which now controls a 97.63% stake in the conglomerate.
In determining the issue price, Pharmaniaga said the board will take into consideration the prevailing market conditions, and provisions of the Main Market Listing Requirements (MMLR) of Bursa Securities Malaysia Bhd.
The provision stipulates that the issue price shall not be priced at more than a 10% discount to the volume-weighted average market price (VWAMP) of its shares for the five market days immediately preceding the price-fixing date.
For illustration purposes, based on the five-day VWAMP of the shares up to and including the latest practicable date of 37.72 sen, the indicative issue price will be 34 sen per placement share, representing a discount of 3.72 sen or 9.86% to the five-day VWAMP.
Based on the indicative issue price of 34 sen, the proposed private placement is expected to raise gross proceeds of about RM44.55 million, out of which RM44.21 million is intended to be utilised for working capital and RM336,000 will be used to defray estimated expenses.
It noted the actual proceeds to be raised from the exercise is dependent on the actual number of placement shares to be issued and the issue price.
Pharmaniaga’s shares closed 2.6% or 1 sen lower at 38 sen today, valuing the group at RM497.88 million.
The proposed exercise would enable the company to raise funds while it is formulating a plan to regularise its financial condition which is to be submitted to Bursa Malaysia Securities within 12 months from Feb 27, 2023.
“After due consideration of the various methods of fundraising, such as rights issue and bank borrowings, the board is of the opinion that the proposed private placement is the most appropriate avenue of fundraising at this juncture,” it added.