Naim to raise up to RM160mil from rights issue

KUCHING: Naim Holdings Bhd targets to raise up to RM159.9mil from a proposed rights issue, with the proceeds mainly to be utilised to fund residential property projects.

The Sarawak property developer has proposed to undertake a renounceable rights issue of up to 355,416,000 new ordinary shares at an issue price of 45 sen a piece on the basis of three rights shares for every two existing shares.

The issue price represents a discount of 18.18% to the theoretical ex-rights price of 55 sen.

The corporate exercise is expected to raise gross proceeds of about RM100mil under the minimum scenario and up to RM159.94mil under the maximum scenario.

To meet the minimum target of RM100mil, Naim intends to procure from its major shareholders Datuk Amar Abdul Hamed Sepawi and Datuk Hasmi Hasan and persons acting in concert with them (PACs) irrevocable and unconditional undertaking to subscribe for their respective entitlements (about 142.24 million shares) and additional undertaking to subscribe for an additional of nearly 79.98 million shares not taken up by other entitled shareholders.

Abdul Hamed (also Naim chairman), Hasmi (managing director) and their PACs, who collectively own nearly 94.83 million shares or 40.02% of Naim’s issued capital of 250 million (excluding 13 million treasury shares) intend to seek approval from the Securities Commission for an exemption from the obligation to undertake a mandatory offer for the remaining Naim shares not already owned by them arising from the subscription for the excess rights shares.

According to Naim, the proposed rights issue would strengthen its financial position and capital base by reducing its gearing level and increasing its net assets,thereby providing greater financial flexibility.

“The board believes that the proposed rights issue will help position the group on better financial footing to undertake more projects in the future,in tandem with its strategy to further enhance its profitability,” it added in a filing with Bursa Malaysia. The proposed exercise is expected to be completed in first quarter-2019.

If the minimum RM100mil is raised, Naim said RM70mil or 70% would be channelled to fund property development activities and RM25mil for repayment of bank borrowings. If the maximium RM159.9mil is raised, RM114.9mil and RM40mil will be utilised for property development and loan repayment respectively.

Under both scenarios, RM4.2mil will be utilised as general working capital and RM800,000 for estimated expenses for the fund-raising exercise.

Naim group has total borrowing of RM545.4mil and shareholders fund of about RM1.13bil as of Dec 31,2017.

The three property projects to be financed by proceeds from the rights issue are Sapphire On The Park @ Kuching Paragon, The Peak @ Bintulu Paragon (both high-rise condominium developments) and Miri’s Bandar Baru Permyjaya landed residential development (covering 42.6 acres).

The on-going Sapphire On The Park project,which has a gross development value (GDV) of RM190mil, is expected to be completed by first quarter of 2021.

Construction work of The Peak (Sarawak’s tallest condominium at 34 storeys) project, with GDV of RM150mil, started in 2015 for scheduled completion in second quarter-2019.

The Bandar Baru Permyjaya project (GDV of RM140mil) got off the ground early this year for targeted completion in first quarter-2021.

Meanwhile, Naim group narrowed its pre-tax loss to RM2.7mil in first half-2018 (1H-2018) from RM32mil in 1H-2017 as revenue jumped by 29% to RM260mil from RM207mil during the same period.

In the second quarter ended June 30,2018,the company returned to the black with group’s pre-tax profit of RM10.2mil against loss of RM25.3mil in 2Q-2017 as revenue improved to RM116.2mil from RM93.8mil.

“In the near term,we continue to focus on our existing three main flagship/integrated developments in Miri (Permyjaya),Bintulu (Bintulu Paragon) and Kuching (Kuching Paragon), and put in various initiatives to sell off the existing property stocks,” the company said in notes accompanying its latest financials.

On its other core business - construction, Naim said it was cautiously optimistic to complete the current outstanding order book at decent margin and within scheduled timeline. A major on-going construction project is the Pan Borneo Highway work package.

Naim said it was in the process of disposing of the non-performing premix operation to minimise further loss and realise cash.