Fututech proposes private placement to raise RM150 million

KUALA LUMPUR: Fututech Bhd, which is acquiring two construction firms for RM458 million, is looking to raise some RM150 million from a proposed private placement of 100 million new Fututech shares.
“Together with the proposed acquisitions, we are also announcing a proposed private placement of which details and pricing are to be determined at a later date. The proposed private placement is intended to raise funds to facilitate the earlier mentioned proposed acquisitions,” its executive chairman Datuk Tee Eng Ho told reporters at a signing ceremony between the three parties yesterday.
Fututech CEO Evan Loo Soo Loong said it hopes to raise RM150 million from the proposed private placement based on an indicative price of RM1.50 per share.
However, he said the proposed private placement is expected to take place in January next year and the issue price will depend on market conditions then.
“The proceeds raised will be used for working capital as well as part payment for the proposed acquisitions (RM55.2 million),” he added.
Yesterday, Fututech signed conditional share sale agreements for the proposed acquisitions of the entire equity interest in construction firms Kerjaya Prospek (M) Sdn Bhd and Permatang Bakti Sdn Bhd.
The total purchase consideration for the proposed acquisitions is RM458 million, of which RM55.2 million will be satisfied in cash.
The company will satisfy the RM438 million consideration for Kerjaya Prospek with RM35.2 million in cash, RM42.8 million via the issuance of Fututech shares at an issue price of RM1.16 per share and RM360 million via the issuance of new redeemable convertible preference shares (RCPS) of 50 sen each in Fututech at an issue price of RM1.16 per RCPS.
Meanwhile, the RM20 million consideration for Permatang Bakti will be satisfied via cash. Loo said it aims to complete the proposed acquisitions in December, depending on feedback from Bursa Malaysia.
He said it aims to achieve a target market capitalisation of more than RM500 million to jump start the company into the band of mid-tier construction companies, upon the successful implementation of the proposed acquisitions and proposed private placement.
He said Fututech is currently considered a small construction company with RM140 million market capitalisation. Moving forward, construction will remain the key driver for the group with other divisions being property development and manufacturing of lighting and kitchen solutions.
Tee said the aim is to transform Fututech into a premium contractor with a focus on the captive market for high-rise projects.
“The proposed acquisition, once concluded will present Fututech with an enlarged construction order book of about RM2.86 billion and in turn enhance the company’s financial performance moving forward,” he said.
Fututech’s current order book stands at RM121 million while the combined order book for Kerjaya Prospek and Permatang Bakti is RM2.74 billion.
The proposed acquisition of Kerjaya Prospek also comes with an aggregated profit guarantee of RM150 million for three years.
Tee said the projection is based on jobs in hand and is confident that Kerjaya Prospek can deliver based on its extensive portfolio and clients such as SP Setia Bhd, Eastern & Oriental Bhd and Eco World Development Group Bhd who still have many launches planned.