China Auto’s share placement exercise raises eyebrows

by **Cals** Mon 07 Oct 2013, 10:22

Business & Markets 2013

Written by Shalini Kumar of theedgemalaysia.com

Monday, 07 October 2013 10:06

KUALA LUMPUR: In just nine months after being listed on the Main Market of Bursa Malaysia, China Automobile Parts Holdings Ltd (CAP) announced a private placement exercise of up to 60 million new shares, representing up to 10% of its issued share capital.

The timing of the placement exercise, announced last Thursday, may raise eyebrows considering that CAP’s share price had tumbled from its IPO price of 68 sen to 35 sen last Friday, which halved its market capitalisation to RM201 million.

In an announcement to Bursa Malaysia, the company said it received a general mandate from its shareholders for the placement exercise at its AGM, but the issue price for the placement shares has yet to be determined.

CAP said the issue price will be determined after taking into consideration of the prevailing market conditions and five-day volume-weighted average market price (VWAP) of its shares preceding the price-fixing date to be determined by the board. “However, the issue price shall not be less than the par value of CAP shares of US$0.10 each [approximately 31.8 sen],” it added.

Using an illustrative issue price of 35 sen per placement share, CAP said it would raise gross proceeds of up to RM21 million.

“At present, CAP has sufficient financial resources from internally-generated funds and the proceeds from the listing exercise (in January) to meet its working capital requirements as well as to undertake its ongoing expansion plans, including the expansion of the production centre and production capacity.

“The proposed private placement is being undertaken mainly to enlarge the shareholder base of the company,” said CAP, which had raised RM61.2 million from its IPO in January, via the public issue of 90 million new shares at 68 sen apiece.

According to its published financial statements, CAP’s cash and cash equivalents stood at RM195.8 million as at June 30.

Last Thursday, CAP also proposed a bonus warrants issue on the basis of one free warrant for every two existing shares held.

Up to 330 million warrants will be issued with the exercise price fixed at 35 sen each. The estimated gross proceeds, if all the warrants are exercised, should be about RM115.5 million.
The proposals are expected to be completed by the fourth quarter of 2013.

This article first appeared in The Edge Financial Daily, on October 07, 2013.