Leweko proposes rights issue

KUALA LUMPUR (Bernama) -- Leweko Resources Bhd's proposed rights issue will allow the company to preserve funds for its construction division as the management expects its construction activities to increase in the near term.

The company said the proposed exercise was expected to raise up to RM16.51 million based on an indicative issue price of nine sen per rights share.

"Should the requisite funds of approximately RM15.73 million be raised (after deducting estimated expenses of RM0.78 million in relation to the proposed rights issue) through bank borrowings instead ... and based on Leweko’s current average interest rate of 6.4 per cent per annum, Leweko would incur additional finance costs of approximately RM1.01 million per annum,” it said in a filing with Bursa Malaysia today.

The latest statement contained additional information in relation to the proposed fund-raising exercise first announced on Sept 8. In the previous announcement, it said of the proceeds, RM7 million would be allocated to fund existing construction projects and RM6 million would be used to acquire new land bank for property development, among others.

"By undertaking the fund-raising exercise, the management will have the flexibility and control of the group's internally generated funds to grow its construction and property development businesses while reducing its reliance on conventional bank borrowings,” it said.

The log trading and timber harvesting company has proposed a renounceable rights issue of 183.46 million new ordinary shares on the basis of one rights share for every two existing Leweko shares held, together with 220.15 million free detachable warrants on the basis of six new warrants for every five rights shares.