KUALA LUMPUR: Utusan Melayu (M) Bhd has proposed to place out new shares for RM2.1mil after the newspaper publisher defaulted on its loans.
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 that will 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 approximately 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 is of the view that the proposed private placement is the most appropriate avenue of fund raising as the proposed
private placement enables the company to raise additional funds to repay the bank borrowings which would allow for the company to have yearly interest cost savings of up to RM108,213; provides the company an expeditious way of raising funds from the capital market as opposed to other forms of fund raising; and increase the size and strength of the company’s shareholders’ funds,” Utusan said.
Utusan said the proposed private placement is expected to be completed by the third quarter of 2018.
Meanwhile, Utusan announced that it has defaulted in its principal payment totalling RM1.18mil to Bank Muamalat Malaysia Bhd and Maybank Islamic Bhd.
Utusan said due to financial constraints, the company was not able to meet its obligation to repay the
banks and therefore 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.