PETALING JAYA: Versatile Creative Bhd has proposed to undertake a private placement of up to 12.91 million new shares in the company, representing up to 10% of the company’s existing issued share capital to raise up to RM4.40 million.
“Assuming the placement shares are issued at the illustrative issue price, up to RM4.40 million is expected to be raised from the exercise,” Versatile Creative said in a stock exchange filing. The placement shares are intended to be placed out to third party investors to be identified later.
The proceeds of up to RM4.25 million will be used to finance the operations of Versatile Creative and its subsidiaries, which includes the purchase of raw materials such as coated boards and resin for the group’s paper box and plastic products respectively, payment to suppliers as well as staff related costs, business development expenses and general overheads.
With the availability of additional funds, the group may purchase raw materials in larger quantities and will be able to negotiate for lower pricing from its suppliers which is envisaged to further improve the gross margin of the group.
“The board is of the opinion that the proposed private placement is an appropriate avenue for raising funds as it will allow the company to raise funds expeditiously as the general mandate has been obtained and as opposed to other fund raising options such as a rights issue.
“It will also enable the company to raise the requisite funds without incurring additional interest expense, thereby minimising any potential cash outflow in respect of interest servicing; and could potentially increase the liquidity of the group’s shares in view of the larger capital base.”
The exercise is expected to contribute positively to the future consolidated earnings of the group through the proposed utilisation of proceeds raised from the issuance of the placement shares.
The earnings per share of the group is expected to be diluted as a result of the increase in the number of shares in issue.
The proposed private placement is subject to approvals being obtained from Bursa Securities for the listing and quotation of the placement shares on the Main Market of Bursa Securities.
Barring unforeseen circumstances and subject to the approvals of the relevant authorities being obtained, the exercise is expected to be completed by the third quarter of 2019.
