KUALA LUMPUR (Jan 3): MAG Holdings Bhd has proposed a private placement of up to 10% of its total issued shares to partly fund the expansion of its prawn farm in Tawau, Sabah.
In a filing with Bursa Malaysia, the aquaculture-based food producer said it expects to raise up to RM35.51 million based on a placement size of 212.88 million shares — assuming outstanding warrants are exercised — at an illustrative issue price of 16.68 sen apiece.
MAG has earmarked 85.18% of the proceeds, or RM30.25 million, to partly fund the expansion of its Wakuba Farm in Tawau.
“Part of the expansion consists of the construction of up to 96 new prawn ponds together with new infrastructures on an adjacent land (approximately 150 acres) to the existing Wakuba Farm.
“The company has started with the Wakuba Farm expansion and the progress of the construction is approximately 60% as at the LPD (Dec 30, 2022),” it added, noting that the estimated total cost of the expansion is about RM90 million.
Meanwhile, MAG will allocate RM5 million (14.08%) for working capital requirements, and RM262,000 (0.74%) to defray the estimated expenses related to the proposed private placement.
MAG said its board is of the opinion that the proposed private placement is the most appropriate avenue of fundraising as it allows the company to raise funds expeditiously without incurring interest costs as compared to bank borrowings.
MAG said the private placement is expected to be completed within six months from the date of approval from Bursa Securities.
Shares in MAG finished unchanged at 18.5 sen on Tuesday (Jan 3), giving the company a market capitalisation of RM259.99 million.
Source: TheEdge - 4 Jan 2023