In a bid to improve its financial position, Malaysian Resources Corp Bhd (MRCB) plans to raise a minimum of RM2.17 billion from its stockholders via a rights issuance, reported The Star.
The company said the money will be used to significantly reduce its debt load and fund some of the existing property developments and construction projects, like ongoing works in Bukit Jalil.
MRCB Chief Financial Officer Ann Wan Tee emphasized that it will not be used for projects related to Bandar Malaysia.
“The money raised from the rights issue would be used to finance its Bukit Jalil project and bank borrowings from land purchases such as the German Embassy.”
He said this would improve MRCB’s balance sheet so that it would not need to carry out developments just to repay its debts.
“We don’t want to be pushed to undertake the development of our landbank to fulfil bank borrowings. Our land is located in urban areas and can garner better value if developed over a 15 to 20-year period.”
As of 31 December, MRCB’s loans reached around RM2.94 billion, which includes over RM1 billion in bonds associated with Johor’s Eastern Dispersal Link (EDL) highway that it is currently selling.
MRCB’s major stockholders, Gapurna Sdn Bhd and the Employees Provident Fund (EPF), have committed to subscribe for the full entitlement in the proposed rights issue and are considering to apply for the excess issuance.
At present, Tan Sri Mohamad Salim Fateh Din’s private vehicle Gapurna holds a 16.8 percent stake in the company, while the EPF owns 33.5 percent.
Upon completion of the share issuance, MRCB expects to slash its gearing from 0.73 times to 0.01 times, resulting in interest savings of RM46.69 million.
Under the offering, MRCB intends to issue one rights share for every existing one, doubling its share base to 4.35 billion. Investors will also get a free warrant for every five rights subscribed.
The issue price for the rights and warrants will be announced later, while the issuance is targeted to be completed by September 2017.
According to MRCB Chief Corporate Officer Amarjit Chhina, MRCB currently has 400 acres of landbank with an estimated gross development value of RM49 billion.
Regarding the transportation hub at Bandar Malaysia and the high-speed railway hub, he said it is still in the discussion stage.
Image sourced from KiniBiz
MRCB’s developments:
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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