KUALA LUMPUR (Aug 10): Prolexus Bhd intends to raise up to RM102.58 million — about 92% of its market capitalisation of RM111 million — through a renounceable rights issue of irredeemable convertible unsecured loan stocks (ICULS) to trim its bank borrowings and to fund its working capital.

In a bourse filing, the apparel maker said the renounceable rights issue entails the issuance of up to RM102.58 million nominal value of 2.05 billion ICULS at its full nominal value of 5 sen each, on the basis of five ICULS for each existing Prolexus share, on an entitlement date to be determined. The conversion price of the five-year ICULS is also yet to be fixed.

Besides repaying bank borrowings, for which it is allocating up to RM42.6 million — its borrowings stood at RM71.81 million as on April 30 this year — and to fund its working capital (up to RM34.18 million), Prolexus plans to use as much as RM15 million to acquire businesses that complement its existing one and RM10 million for the installation of rooftop solar photovoltaic systems.

The last time Prolexus made a cash call was in December 2015, when it proposed a rights issue to raise up to RM62.53 million mainly for the construction of a new garment factory and a new fabric mill. The exercise was completed in June 2016.

It expects its rights issue this time to be completed by the second quarter of 2024.

In its third quarter ended April 30, 2023 (3QFY2023), its net loss widened to RM12.54 million from RM1.75 million a year before dragged by loss on other investments and lower revenue incurred during the quarter under review. It reported other operating loss of RM10.28 million versus other income of RM1.52 million previously. Revenue dropped 7.05% to RM48.36 million from RM52.02 million.

Despite the higher quarterly loss incurred, it posted a net profit of RM20.78 million for the first nine months of FY2023 (9MFY2023) compared to a cumulative net loss of RM255,000 a year ago, thanks to lower selling and distribution expenses, and lower tax expenses. Revenue, however, dipped 1.82% to RM168.73 million from RM171.87 million.

Over the past three years, the group’s financial performance has been trending downwards. It made a net profit of RM17.63 million in FY2020, which slipped to RM16.73 million in FY2021 and then halved to RM8.74 million in FY2022, while revenue dropped from RM340.5 million in FY2020 to RM227.53 million in FY2021, and recovered a little to RM237.38 million in FY2022.

Shares in Prolexus closed unchanged at 40 sen, giving the group a market capitalisation of RM111 million.

Year to date, the stock has fallen 17% from 48 sen.