LIQUIDITY PUSH

Actual amount to depend on issue price fixed from book-building exercise

MAXIS Bhd aims to raise up to RM1.72 billion via a book building exercise,

with the proceeds to be used to repay borrowings. The move will also create financial flexibility for the funding of future spectrum assignment

fees, expansion plans and growth strategy.

AYISY YUSOF

KUALA LUMPUR bt@mediaprima.com.my

MAXIS Bhd plans to raise up to RM1.72 billion through the issuance of 300 million new shares to private investors.

The new shares represented about four per cent of the total number of shares issued as at Friday, said Maxis.

The actual amount to be raised depends on the issue price that will be fixed from a book-building exercise.

Proceeds from the placement would be used to repay borrowings and related incidental costs within 12 months, said Maxis.

“The equity fund-raising exercise will strengthen the group’s financial position by reducing part of its existing borrowings. The benefits will include enhanced cash flows, liquidity and interest costs savings as well as improved gearing levels,” it said in a filing to Bursa Malaysia yesterday.

Maxis said the placement would also create financial flexibility to fund future spectrum assignment fees, expansion plans and growth strategy.

“We expect the private placement to be completed by the end of next month,” it added.

The stock last traded at RM5.88 on Friday, giving it a market capitalisation of RM44.16 billion.

JF Apex Securities Bhd senior analyst Lee Cherng Wee said any upside of the placement on its share price partially depended on who bought the shares.

“Is it for the strategic partner or just for normal investors?”

Lee, nevertheless, said the placement would help Maxis reduce its debt level, although its earnings per share would be diluted.

“The fund-raising exercise will not impact Maxis’s operational division in terms of its postpaid and prepaid subscribers’ movement. Some of the proceeds will be used to pay for its future spectrum fees or to fund expansion plans. However, I think most of the proceeds will be used to pare down borrowings.”

According to a source, Maxis has limited options in raising funds to trim borrowings.

“Previously, its subsidiary, Maxis Broadband Sdn Bhd, issued Islamic medium-term notes with a nominal value of up to RM10 billion, which would be partly used to finance the group’s internal reorganisation exercise,” he said, noting that its peers DiGi.com Bhd had raised RM5 billion from the sukuk market, while Axiata Group Bhd was monetising some of its investments.

The source said the fund-raising exercise was a good way for the company to improve its capital expenditure (capex) and infrastructure.

“Generally, the annual capex for a telco is about RM1 billion. The private placement will improve Maxis’s liquidity as the share base would increase,” he said.