Financial Highlights

By Sulhi Khalid

KUALA LUMPUR (Sept 2): Malaysia Steel Works (KL) Bhd (Masteel) has signed an underwriting agreement with M&A Securities Sdn Bhd for the former’s rights issue with warrants exercise to raise RM89.41 million.

In a statement today, the steel maker said the other co-underwriters are BIMB Securities Sdn Bhd, Malacca Securities Sdn Bhd and Inter-Pacific Securities Sdn Bhd.

On Feb 8, Masteel obtained its shareholders’ approval for the rights issue of up to 226 million new ordinary shares on the basis of one rights share for every two existing Masteel shares held. The cash is sweetened with free detachable warrants on the basis of one warrant for every one rights share subscribed.

The cash call is fixed at 39.5 sen, representing a 28% discount to the last traded price per share of 55 sen on Sept 1 and a 16% discount to the theoretical ex-all price per share of 47 sen.

“TYY Resources Sdn Bhd, which is the company’s largest shareholder, has undertaken to subscribe for its full entitlement to the rights issue with warrants. Coupled with commitment from the underwriters, this effectively means that the Rights Issue with Warrants is fully underwritten,” said the steel maker.

Of the funds raised, the group highlighted RM10 million will be used for the repayment of existing bank borrowings, RM76.81 million to fund the company’s working capital requirements, and the balance RM2.6 million to defray expenses of the rights issue.

Masteel Managing Director and CEO Datuk Sri Tai Hean Leng said the issuance of rights shares along with the free warrants would increase the number of Masteel shares in circulation, as well as enhance the liquidity and marketability of our shares.

This corporate exercise provides shareholders with the option to increase their participation within the company and benefit from its future growth, he said.

Shares in Masteel ended 1.5 sen or 2.73% lower at 54 sen, giving it a market capitalisation of RM240.01 million. It has a share issuance of 452.74 million.

Year to date, the stock has fallen by 12.3%.

Edited by Kathy Fong