Utusan Melayu to raise RM2.1m to repay borrowings

Media firm plans private placement exercise to seek the amount

PETALING JAYA: Utusan Melayu (M) Bhd has proposed to undertake a private placement exercise of up to 10% of its issued shares to raise about RM2.1mil to repay its borrowings.

The Umno-linked media organisation said in its filings yesterday that the proposed exercise would see the issuance of up to 11.07 million new Utusan shares to be placed out to third party investors to be identified at a later stage.

The issue price of the placement shares, it said, would be determined and fixed at a later date on receipt of all relevant approvals for the proposed private placement.

Based on an indicative issue price of 19 sen per placement share, Utusan said the proposed private placement is expected to raise gross proceeds of RM2.1mil.

This indicative issue price is based on a discount of about 9.52% to the five-day volume weighted average market price of Utusan shares before the date of the announcement at 21 sen per share.

Of the total gross proceeds raised, Utusan said RM2mil would be used to repay bank borrowings, while the remainder would be used for expenses related to the placement exercise.

After due consideration of the various methods of fund raising, the board said the proposed private placement is the most appropriate avenue as (it) enables the company to raise additional funds to repay bank borrowings.

The move enables the company to have yearly interest cost savings of up to RM108,213. It is also an “expeditious way” of raising funds from the capital market as opposed to other forms of fund raising. It will also increase the size and strength of the company’s shareholders’ funds, Utusan said.

The exercise is expected to be completed by the third quarter of this year.

In a separate statement, Utusan said it has defaulted in its principal payment totalling RM1.18mil to Bank Muamalat Malaysia Bhd and Maybank Islamic Bhd.

The company was unable to meet its financial obligation and had defaulted in profit and principal payment of RM530,121 to Bank Muamalat and RM650,750 to Maybank Islamic.

“The company intends to submit a proposal to restructure the loan facilities with the banks.

In the meantime, the company is working towards restructuring all its loan facilities in line with its business transformation plan,” Utusan said.