It is planning to place out up to 10% of its shares to third-party investors to raise up to RM54.97 million, four months after it completed a rights issue with warrants that failed to raise sufficient funds required for its Vietnam power plant JV project.
The undersubscribed rights issue, which was completed in December 2018 with a take-up rate of only 37.52%, managed to bring in gross proceeds of RM25.61 million, in contrast to the RM68.24 million it had intended to raise to expedite the project.
Incidentally, that was the second cash call it made in 12 months, after the group completed a private placement of up to 10% of its shares at end-March 2018 to raise RM68.49 million for its Pacific Star project in Petaling Jaya.
The latest placement will involve the issuance of up to 68.71 million shares. The RM54.97 million expected proceeds to be raised from this latest placement is based on an illustrative price of 80 sen.
Of the proceeds, RM39.43 million or 72% will be used for the payment of additional equipment and additional costs that have arisen from its Vietnam power plant joint-venture project with China Power Engineering Consulting Group Co Ltd, which is 56% constructed as at April 11 2019.
Besides that, RM10 million or 18% will be earmarked for preliminary expenses for its venture into renewable energy projects in Southeast Asia, possibly in solar and hydropower projects in Vietnam, Indonesia and Malaysia.
JAKS will also use RM4.34 million to repay bank borrowings, while the remainder will cover estimated expenses.
As the rights issue of the warrants (completed in December 2018) was undersubscribed by 62.48%, the proceeds raised were prioritised towards the repayment of bank borrowings, Vietnam power plant project, and to defray the relevant expenses relating to the rights issue of warrants.
The proposed private placement will enable JAKS to raise proceeds to bridge the gap for existing expenditure required for the Vietnam power plant project (such as the construction and engineering works for the jetty and administration building, and fabrication of additional equipment by contractors, as well as consultancy costs), which were unable to be funded from the rights issue of warrants.