KUALA LUMPUR (July 29): PMB Technology Bhd (KL:PMBTECH) has proposed to undertake a renounceable rights issue of up to 266.78 million new ordinary shares on the basis of six rights shares for every one existing ordinary share held to raise around RM300 million.

The producer of silicon metal and metal fabricator is also proposing to procure irrevocable undertakings from its major shareholders to subscribe for their respective entitlements, amounting to RM144.6 million.

This includes Press Metal Aluminium Holdings Bhd (holding 23.29% in the company), its executive chairman Tan Sri Koon Poh Keong (10.78%), chief executive officer Koon Poh Ming (5.85%), and executive director Datuk Koon Poh Tat (5.27%).

For the remaining RM155.4 million entitled to other shareholders, PMB also proposes to procure undertakings from the Koon family or their nominated parties to subscribe for any rights shares not taken up.

As of July 26, PMB’s issued share capital stood at RM512.94 million, comprising 1.63 billion shares.

Shares of PMB have been on a steep decline since mid-June this year, reaching the year-low of RM1.61 on July 26. Year-to-date, the stock has dipped over 41.81%.

However, the stock closed one sen or 0.58% higher at RM1.74 on Monday, valuing the company at RM2.79 billion.

Based on an illustrative issue price of RM1.13, PMB said that the proceeds from the proposed rights issue, totalling RM298.8 million, will be used to partially repay its bank borrowings. The remaining RM1.2 million will cover estimated expenses.

As of July 15, PMB’s total bank borrowings amounted to approximately RM983.3 million, consisting of term loans, trade facilities, and revolving credits, according to its bourse filing.

“Part of the borrowings were used to finance the expansion of Phase 3 of the metallic silicon plant, which is currently under testing and commissioning and is expected to commence production by the third quarter of 2024,” PMB said.

According to its 2023 annual report, the development of its Phase 3 metallic silicon plant incurred a capital expenditure of RM320 million during FY2023. Upon completion, all the three plants may have a combined annual installed capacity of 108,000 tonnes with a total power of 129MW secured with Syarikat Sesco Bhd.

As at end-March, it had cash and bank balances of RM871.49 million, with net gearing of 0.9 times. Earlier this month, PMB entered into an agreement to sell a piece of land in Klang to Knauf Sdn Bhd for RM79.28 million.

According to its annual report, PMB also intends to “continue to explore its potential expansion in Sabah" after the memorandum of understanding it signed Sabah Oil & Gas Development Corp lapsed on March 28.

PMB, which has not undertaken any equity fundraising exercises in the past 12 months, expects the rights issue to be completed in the fourth quarter of 2024, with AmInvestment Bank appointed as the principal adviser.