SC Estate Builder to make cash call to raise up to RM64mil

KUALA LUMPUR: SC Estate Builder Bhd (SEBB) plans to undertake a rights issue with warrants to raise up to RM63.95mil for its proposed diversification into construction and for expanding the range and volume of its products.

In a filing with Bursa Malaysia, the building materials trader (formerly called Flonic Hi-Tec Bhd) also proposed a par value reduction involving the cancellation of 4 sen from the par value of its 5 sen shares to give rise to a credit of up to RM51.16mil to offset its accumulated losses.

Following that, SEBB will launch a 5-for-1 rights issue, together with free detachable warrants (Warrants C) on the basis of two warrants for every five rights shares.

Half of the proceeds raised will be used for working capital and slightly less than that will be for business acquisition or investment.

SEBB said the group was on the lookout for suitable construction-related companies and/or assets to acquire or invest in.

The proposed diversification is expected to complement the group’s existing businesses of trading in building materials and equipment parts and providing mechanical and electrical engineering and maintenance services.

On construction experience, the company pointed out that its managing director Loh Boon Ginn, 26, had set up an investment company involved in investment activities in construction prior to assuming his current post in March last year.

In addition, SEBB business general manager Lim Chan Hwa, 57, had worked in two property development companies, including as general manager at one of them. He later became an independent development consultant in project management and development, catering mainly to construction-based players.

Of the working capital allocation, SEBB said that up to RM26.91mil would be used to buy building materials and related products so that it can have a wider range of product offerings beyond just construction materials for the industrial grade buildings.

In order to meet the minimum subscription level for the rights issue, SEBB’s substantial shareholders Takzim Empayar Sdn Bhd and SC Estate World Sdn Bhd (of which Loh is a substantial shareholder) had provided their respective irrevocable undertakings to subscribe to their entitlements.

The aggregate equity interest of the two shareholders may increase from 24.79% to 66.42% (after entitlement undertakings) or to 74% (after entitlement undertakings and additional undertaking) of SEBB’s enlarged paid-up share capital of SEBB, prior to the exercise of the warrants.

Hence, the company seeks an exemption for them from the obligation to undertake a mandatory take-over offer.