KUALA LUMPUR (Aug 1): Pharmaniaga Bhd is appealing against Bursa Securities' decision to reject the company's plan to undertake a second private placement on a stand-alone basis.

The appeal was submitted to Bursa Securities on Tuesday (Aug 1), the financially distressed company said in a bourse filing.

Pharmaniaga had proposed to undertake the second private placement two weeks ago, involving the placement of up to 144.12 million new shares, representing 10% of the company's total issued shares, to the Armed Forces Fund Board (LTAT) to raise gross proceeds of up to RM50 million.

The money was meant to be used as an interim measure to bridge the company's working capital requirements while it formulates a plan to regularise its financial condition to address its Practice Note 17 (PN17) status.

The proposal comes after Pharmaniaga had previously undertaken a private placement of 131.02 million new shares or 10% of its then share base. That exercise, which was completed on July 24, raised RM45.86 million to fund the company's working capital.

Last week, Bursa Securities informed Pharmaniaga that it was "unable to consider" the second private placement proposal as a fund-raising exercise on a stand-alone basis, as such efforts should be part of the company's proposed regularisation plan. The second private placement may be included as part of the regularisation plan, the company was told.

Bursa Securities informed Pharmaniaga that as a PN17 company, the company must ensure expeditious regularisation of its financial condition to warrant continued trading and on the exchange.

Company in midst of formulating regularisation plan

In a separate filing on Tuesday, Pharmaniaga said the company has about seven months to submit its regularisation plan to the relevant regulatory authorities for approval and that it is still in the midst of formulating the plan.

In May, the government said Pharmaniaga will announce a regularisation plan as early as August.

Pharmaniaga fell into PN17 status in February, after booking provisions of RM552.3 million for unsold Covid-19 vaccines which resulted in negative equity on its balance sheet. Its capital deficiency stood at RM119.19 million, according to its earlier filing.

In July, Phamaniaga bagged a new seven-year concession agreement to provide medical supply logistics services to the Ministry of Health, following the end-June expiry of the six-month extension on its concession agreement with the government for the provision of medicines and medical supplies.

In its first quarter ended March 31, 2023, Pharmaniaga’s net profit fell 90.5% year-on-year to RM2.65 million, as revenue slipped 8.5% to RM880.45 million, coupled with higher finance costs and operating expenses.

Pharmaniaga’s largest shareholder is Boustead Holdings Bhd with a 52% stake. Boustead is being taken private by the Armed Forces Fund, which controls a 97.63% stake in the conglomerate.

Shares of Pharmaniaga closed down 1.5 sen or 3.61% to 40 sen on Tuesday, giving the company a market capitalisation of RM576 million.

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