KUALA LUMPUR (Nov 6): Pharmaniaga Bhd (KL:PHARMA) has revised its regularisation plan, which aims to lift it out of Practice Note 17 (PN17) status, by adjusting the capital reduction and excluding warrants from its rights issue.

The proposed plan now includes a RM520 million capital reduction, as well as a rights issue set to raise up to RM353.516 million. Meanwhile, a RM300 million private placement proposed by the company remained unchanged.

Prior to this, the pharmaceutical group had proposed a share capital reduction of RM180 million as well as rights issue with free warrants to raise up to RM354.6 million.

With the revision, the free warrants portion has been removed from the rights issue proposal, which Pharmaniaga said was to mitigate dilution risks.

The group’s largest shareholders include Boustead Holdings Bhd with a 47.12% stake, followed by the Armed Forces Fund or Lembaga Tabung Angkatan Tentera (LTAT) with 7.83%. LTAT took Boustead Holdings private last year as a move to restructure the conglomerate.

Should the two shareholders subscribe in full their entitlements of the rights issue, Boustead will need to fork out up to RM166.58 million, while LTAT’s portion amounts to RM27.68 million, based on back of envelope calculation.

Proceeds from the rights issue will target debt repayment, working capital and business expansion, with priority given to loans repayments and business expansion.

As Pharmaniaga’s issued share capital currently stands at RM200 million, the proposed fundraising exercises are set to occur before the capital reduction.

At end-June, the generic drug maker had negative equity reserves of RM473.04 million, mainly on accumulated losses of RM574.91 million.

The regularisation plan requires approval from Bursa Malaysia and Pharmaniaga’s shareholders.

Pharmaniaga fell into PN17 in February 2023 amid massive impairment after being unable to sell RM552.3 million worth of Covid-19 vaccines.

In the six months ended June (1HFY2024), Pharmaniaga booked a net profit of RM28.44 million on revenue of RM1.8 billion.

Shares in Pharmaniaga traded down half a sen or 1.32% to 37.5 sen at noon market break, giving it a market capitalisation of RM533.53 million. The counter is down 2.6% this year.