Financial Highlights

By Shahirah Syed Jaafar

KUALA LUMPUR (Dec 7): Integrated steel manufacturer Malaysia Steel Works (KL) Bhd (Masteel) has proposed a rights issue with free detachable five-year warrants to raise up to RM81.5 million.

In a statement today, Masteel said the rights shares would be issued on the basis of one rights share for every two existing Masteel shares held, on an entitlement date to be determined later. Subsequently, one free detachable warrant would be issued for each rights share subscribed by shareholders.

From the RM81.5 million expected to be raised, up to RM69 million would be utilised for working capital requirements, while RM10 million would be used to repay bank borrowings, and the balance RM2.5 million to defray the estimated exercise expenses, the group said.

“We are witnessing an upcycle in steel demand within both the local and regional markets, as governments prioritise high-multiplier infrastructure developments and construction projects to stimulate economic growth. This is clearly advantageous for established steel manufacturers like us, who have both capacity and competitiveness to reap the benefits of this recovery.

“To this end, our recent capital expenditure investments in employing the latest steel melting technology will optimize our cost-efficiency,” Masteel managing director and CEO Datuk Sri Tai Hean Leng said in the statement.

Assuming all treasury shares are sold as at the date of the announcement, the rights issue with warrants will entail the issuance of up to 226.4 million rights shares, together with up to 226.4 million warrants,the group said.

The rights issue with warrants would expand Masteel’s share capital from RM239.9 million comprising 450.4 million shares, to RM402.9 million comprising 905.5 million shares.

Masteel said the exercise, which is expected to be completed in the second quarter of 2021, is not expected to have any material effect on the earnings of the group for the financial year ending Dec 31, 2020.

Shares of Masteel closed one sen or 2.13% higher at 48 sen today, for a market capitalisation of RM217.32 million.

Edited by S Kanagaraju