WCT nets RM107 million from rights exercise
KUCHING: Following WCT Holdings Bhd’s (WCT) completion of its rights issue exercise, analysts expect the company to net circa RM107 million with a further RM500 million from the warrants.
AmResearch Sdn Bhd (AmResearch) noted that under a minimum scenario, WCT had earlier earmarked a bulk of the RM107 million proceeds from the rights issue to be utilised to repay its suppliers (RM40 million) and subcontractors (RM65 million).
Specifically, these monies were to be equally apportioned to two key projects, the infrastructure works at the RAPID site in Pengerang, Johor and the new Ikano outlet in Jalan Cochrane.
“While this provides a shortterm lift to WCT’s balance sheet, we expect WCT’s upcoming cash commitments to remain sizeable given its ongoing new property investment commitments.
“Likewise, while the landmark arbitration ruling in favour of WCT (RM1.2 billion) for the Meydan Racecourse project will undoubtedly boost its cash flow, the actual claims process could take up to a year,” said AmResearch.
The reported plans by the group to monetise its property investments via a REIT by end-2016 could help.
“We nevertheless believe that actual viability of such a proposal – and hence its targeted valuations – remains to be seen amid weak consumer and retail sentiments post- GST implementation.
“Above all, we reckon that WCT has to start building up its job momentum again, especially on the local front. Year- to- date, the group has only secured one contract.”