Naim Indah makes cash call

Naim Indah makes cash call
Business & Markets 2013
Written by Charlotte Chong
Tuesday, 11 June 2013 10:14


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KUALA LUMPUR: Naim Indah Corp Bhd has proposed a renounceable rights issue after a proposed reduction of par value to raise fresh funds for its property development costs.

Naim is buying a property development company from its substantial shareholder Datuk Raymond Chan for RM39 million. Chan currently holds 8.73% equity interest in Naim.

In a filing with Bursa Malaysia, Naim said it had entered into a sales and purchase agreement (SPA) with Sagajuta Sdn Bhd and Titan Formation Sdn Bhd to buy out Lagenda Erajuta Sdn Bhd through the issue of new shares.

The company said the proposals are expected to create new opportunities within the enlarged group by providing exposure to Lagenda’s project.
Lagenda is the developer of a mixed development comprising offices, commercial complex, apartments and shops in joint ventures with the owners of several tracts of land in Klang, Selangor.

The estimated gross development value for the land is RM930 million while the estimated gross development cost (including the landowner’s entitlement) is about RM578.84 million, yielding a development profit of RM351.43 million.

Under the proposal, Naim Indah will issue up to 350 million new shares at an issue price of 10 sen each. The company will also issue four million new redeemable preference shares of one sen each at an issue price of RM1 to the vendors under the SPA.

The company said it proposes to issue up to 702.03 million new shares for its cash call on the basis of one rights share for every share held. The rights issuewill be sweetened with 842.44 million free detachable warrants. Shareholders would be entitled to six free detachable warrants for every five rights shares subscribed.

“Based on an indicative issue price of 10 sen per rights share, the proposed rights issue with warrants shall raise gross proceeds of RM25 million and RM70.2 million respectively,” the announcement said.

The company will utilise the proceeds for its property development cost, working capital for the group and to defray expenses relating to the proposals.
Naim Indah aborted a proposed private placement, which it proposed in July last year, in view of the rights issue.

The company hogged the limelight early last year as its share price skyrocketed from barely six sen to 72.5 sen in three months when Chan surfaced as a substantial shareholder.

The stock has lost its ground, tumbling to a new low of 10.5 sen on May 3 this year. It rebounded in the last two weeks to close at 20 sen yesterday.

The company incurred a net loss of RM522,000 in the first quarter ended March 31 of the 2013 financial year, compared with a net loss of RM1.3 million a year ago. Revenue came in at RM1 million from RM938,000.

The narrower net loss was due to a decrease in administrative and overhead expenses in the investment holding and property management segments with a decrease of RM570,000 and RM250,000.

The higher revenue was due to an increase of RM150,000 in timber logging, although the revenue from the property management segment registered a drop of RM70,000.


This article first appeared in The Edge Financial Daily, on June 11, 2013.