KUALA LUMPUR: Cape EMS Bhd
has proposed to raise RM50mil through the issuance of redeemable convertible preference shares (RCPS) to Pro3C (Malaysia) Sdn Bhd to support a strategic manufacturing collaboration in Johor.
In a filing with Bursa Malaysia, Cape EMS said it entered into a conditional subscription agreement with Pro3C on Oct 16 for the proposed issuance of 50 million RCPS at RM1 each.
Pro3C is a subsidiary of Taiwan-listed FIC Global Inc (FICG), which provides electronic design and manufacturing services for industries including artificial intelligence (AI), high-performance computing, data centres and semiconductors.
Cape said it had also signed a memorandum of agreement with Pro3C to establish a strategic business collaboration, under which Cape would support Pro3C's Johor operations through manufacturing facilities, material kitting, warehousing and other manufacturing support services at its facilities in Senai.
Of the RM50mil proceeds, Cape plans to allocate RM25mil for equipment purchases, RM12mil for upgrading production and warehouse facilities, and RM12.73mil for operational expenditure and working capital.
The remaining RM270,000 will be used to cover expenses related to the proposed exercise.
The RCPS will have a tenure of five years, with conversion prices ranging from 30 sen in the first year to 65 sen in the fifth year.
The proposed issuance could result in a maximum of 166.67 million new ordinary shares, although conversions are subject to restrictions, including a 10% shareholding limit for Pro3C, FICG and their affiliates.
Cape said the proposed exercise would enable it to raise funds without incurring additional interest costs associated with conventional bank borrowings.
The company does not expect the exercise to have a material impact on its earnings for the financial year ending June 30, 2027, although earnings per share could be diluted upon conversion of the RCPS.
The proposal is subject to approvals from Bursa Malaysia and Cape's shareholders at an extraordinary general meeting, as well as other relevant approvals.
Barring unforeseen circumstances, the exercise is expected to be completed by the first quarter of 2027.
