KUALA LUMPUR (April 2): Chemical manufacturer Sersol Bhd is looking to raise up to RM8.5 million via a private placement of 85 million new shares or not more than 10% of its issued shares for working capital purposes.

The issue price is set to be determined later, the group said in a bourse filing on Tuesday.

For illustrative purposes, however, the group has assumed an issue price of 10 sen per share, which represents a discount of 9.83% to the five-day volume weighted average market price of the shares up to Tuesday of 11.09 sen.

Previously, Sersol raised RM19.39 million in 2022 from two rounds of equity fundraising exercises, with RM15.56 million raised in April and RM3.83 million in October.

However, this fell short of its initial proposal which aimed to raise up to RM26.49 million in total.

For the just announced placement, Sersol said the bulk of the proceeds will be used for its working capital as it intends to increase its holdings of raw materials such as resin, solvent and hardener for the manufacturing of its existing product offerings.

The group said it would be able to enjoy rebates from bulk purchases of the materials from its suppliers, which will in turn allow it to offer more competitive prices for its customers.

Sersol also intends to utilise part of the proceeds to finance any viable acquisitions or investments complementary to its existing businesses.

"The group is considering to expand its product offerings to include the supply of marine protective coatings for water vehicles such as ships, vessels and tankers as well as to offer third-party brand coatings products and related products," it added.

Sersol has changed its financial year to June 30 from Dec 31. Prior to that, the group had been in the red for three financial years, with a net loss of RM1.8 million in FY2021, RM15.6 million in FY2022, and RM16.3 million in FY2023.

For the fourth quarter ended Dec 31, 2023, Sersol saw its net loss narrow to RM3,000 from RM13.75 million a year earlier. Quarterly revenue stood at RM4.07 million, down 23.6% from RM5.32 million previously.

Sersol's substantial shareholders include Sanston Financial Group with a 26% stake, Hillcove Sdn Bhd with 13.7%, Justin Lim Hwa Tat with 12.8% and Morgan Stanley with 6.6%.

Lim was the group’s previous chief executive officer. He was fired by the group in November 2023 after being suspended for allegedly showing insubordination and failing to act as a responsible CEO.

At Tuesday's market close, shares of Sersol Bhd remained unchanged at 10 sen, valuing the group at RM73.1 million. The counter has lost three sen or 23.1% since the start of the year and six sen or 37.5% over the past 12 months.