Asiatic Group (Holdings) is tapping shareholders for funds to help fund the rescue and restructuring of a debt RM52.5 million owed to Maybank by a biomass joint venture.
On April 1, the company announced plans to launch a non-renounceable, non-underwritten rights issue to raise up to $6.1 million.
Shareholders are entitled to subscribe for 13 rights shares for each ten shares they now own. Based on this ratio, up to 2.26 billion rights shares will be up for subscription.
If all rights shares are subscribed, this will bring its total share base to up to around 4 billion shares.
Offered at 0.27 cent each, the rights shares are priced at 10% discount off Asiatic's last traded price of 0.3 cent on March 31.
According to Asiatic, the funds from the rights issue will be used to make good its corporate guarantee to its biomass venture, Maju Intan Biomass Energy (MJE).
See also: VCPlus to raise just $600,000 from placement instead of $6.66 million after investors' u-turn
Asiatic says it is in "the final stage of discussion" with an unnamed white knight to take over MJE. However, it would need to first "make significant financial assistance" to make good the guarantee and thereby, secure its "clean exit" from MJE.
According to Asiatic, its key shareholders, including managing director Tan Boon Kheng and his family, will undertake to subscribe their full allotment of the rights shares.
In addition, three of the shareholders, including Tan, and one Lecca Capital, will also take up excess rights shares in the event other shareholders decline to.
See also: UMS raises $51.6 mil after placement was 2.55 times covered
In the event no other shareholders subscribe for their rights shares, Asiatic would raise just $3.3 million.
Separately, Asiatic is resisting attempts by its joint venture partner in Cambodia to oust it from the power plant business there.
Asiatic has on March 29 filed a notice of objection with a Cambodia Court, to declare that an AGM held on March 14 by the joint venture to be "procedurally invalid".
In its April 1 announcement, Asiatic says that as it reduces its exposure to the energy related businesses, it is will look for new areas to diversify into, such as energy-saving related devices or equipment.
"Any surplus funds arising from the right issue, if any, would be deployed as working capital or seed money to explore potential joint venture with partners within the energy saving industry in Singapore," the company states.
Meanwhile, it remains focused on its original business of supplying fire protection equipment.
