KUALA LUMPUR (Nov 16): Siab Holdings Bhd has proposed a private placement, a rights issue with warrants, and the acquisition of 100% of Taghill Projects Sdn Bhd.

The company said the private placement would involve 100 million new ordinary shares representing 20.42% of the existing issued shares to independent investors to be identified, and at an issue price to be determined later.

The company said In a filing with Bursa Malaysia on Thursday that the issue price will be based on the five-day volume weighted average price of Siab shares immediately preceding the price fixing date, with a discount of not more than 20%, but subject to a minimum issue price of 12 sen per share.

It noted that based on the indicative placement price, the proposed private placement will raise gross proceeds of up to RM12 million, intended for the cash consideration for a proposed acquisition.

Siab has also proposed a renounceable rights issue of 766.52 million rights shares, together with 383.26 million warrants, on the basis of 13 rights shares for every 10 existing Siab shares held on the entitlement date, together with one warrant for every two rights shares subscribed.

The company said the issue price of the rights shares under the proposed rights issue with warrants had been fixed at 12 sen per rights share.

Siab said it also intends to acquire two million shares, which is the entire stake in Taghill, which is principally involved in building construction services, from the vendors, namely Chu Yee Hong, Wong Yih Ming And Yap Kek Siung, for RM122 million.

The purchase consideration will be satisfied via a combination of RM96 million in cash, and RM26 million through the issuance of 200 million new Siab shares at the issue price of 13 sen per share.

The company shared that the rationale for the proposed private placement and the proposed rights issue with warrants will increase the number of Siab shares in circulation, which may potentially enhance the liquidity and marketability of the company's shares on the ACE Market.

"Proceeds to be raised from the exercise are intended to be utilised mainly for the funding of the proposed acquisition and working capital of the group.

"The warrants attached to the rights shares are expected to enhance the attractiveness of the rights shares. The warrants will also provide the company with additional capital when they are exercised, as well as allowing the company to raise fresh proceeds, without incurring additional financing cost, and minimise any potential cash outflow in respect of interest servicing," it noted.

As for the proposed acquisition, Siab said it forms part of the group’s long-term business expansion and growth strategy, as both companies are currently involved in building construction services. Hence, it will enable them to leverage their combined strengths and expertise in the industry, as well as respective business relationships with various industry stakeholders.

"The exercise also represents a strategic opportunity for the company to further strengthen its remaining order book to approximately RM1.89 billion, given that Siab's current unbilled order book stood at RM220.92 million, and Taghill’s at RM1.67 billion," it said.

Siab added that the profit guarantee had also been put in place to mitigate any potential losses or uncertainties associated with the proposed acquisition.