Cypark proposes private placement to raise RM64m

PETALING JAYA: Cypark Resources Bhd has proposed to undertake a private placement, representing up to 10% of its issued shares to raise estimated gross proceeds of up to RM64.37 million.
The proceeds will be utilised for working capital requirements for the engineering, procurement, construction and commissioning (EPCC) of a large scale solar photovoltaic plant (LSSPV).
Cypark had accepted the conditional letter of award dated Jan 25, 2018 from Cove Suria Sdn Bhd in respect of the EPCC contract and operation and maintenance contract of the LSSPV of 30 Mega-Watt capacity at Empangan Kelinchi, Negeri Sembilan.
The board is of the view that the proposed private placement is the most appropriate avenue of fundraising, as it enables the group to raise funds expeditiously without relying entirely on equity funding from the existing shareholders of the company as compared to a proportionate issuance of new shares in a rights issue scenario, which would typically entail a longer implementation time.
It also allows the group to raise funds without incurring interest expenses as compared to bank borrowings, while the enlarged share base is expected to enhance the liquidity of the shares on the Main Market of Bursa Securities.
However, the exercise may dilute Cypark’s consolidated earnings per share as a result of the increase in the number of shares issued. Nonetheless, the proceeds from the exercise are expected to contribute positively to the future earnings of Cypark, as and when the benefits of the utilisation of proceeds are realised.
Barring any unforeseen circumstances and subject to all required approvals being obtained, the proposed private placement is expected to be completed by the fourth quarter of 2018.