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KUALA LUMPUR (Aug 17): Diversified group Ekovest Bhd (KL:EKOVEST) plans to raise up to RM355.85 million through a renounceable rights issue to partially fund the new Laluan Istana-Kiara Expressway (LIKE) and two other projects, as well as repay part of its borrowings.
The proposed fund-raising could trigger a mandatory takeover offer by major shareholder Tan Sri Lim Kang Hoo and persons acting in concert with him if other shareholders do not fully take up their rights entitlements, which may potentially push their collective stake past the 33% threshold.
Ekovest proposed to issue up to 1.78 billion new shares at 20 sen each on the basis of three rights shares for every five existing shares held at an entitlement date to be fixed, according to the group's bourse filing on Monday.
At full subscription, the rights issue will enlarge Ekovest's share base by 60% to 4.74 billion shares from 2.97 billion shares currently. The 20 sen issue price represents a 1.86% discount to the theoretical ex-rights price of 20.38 sen, based on the five-day volume-weighted average market price of 20.61 sen up to Aug 14.
Lim Kang Hoo commits full backing
The rights issue will not be underwritten. Instead, Ekovest has secured irrevocable and unconditional undertakings from Lim and his wholly-owned vehicle, Ekovest Holdings Sdn Bhd, to subscribe in full for their entitlements. Ekovest Holdings also agreed to take up any remaining shares not taken up by other shareholders to ensure full subscription of the rights issue.
Lim currently holds 17.96% of Ekovest, while Ekovest Holdings owns 10.05%. Together with the PACs, their collective stake stands at 32.06%.
If no other shareholders subscribe for the rights issue, their collective interest will increase to as much as 57.54%, triggering the MGO for all remaining shares at no less than the issue price. While they do not plan to seek exemption from the takeover obligation, the joint offerors have no intention to take Ekovest private.
Based on the issue price, Lim has committed about RM63.9 million for his entitlement, while Ekovest Holdings' commitment stands at RM291.95 million.
RM150m for LIKE, RM100m for debt reduction
The largest allocation of the proceeds from the rights issue — RM150 million — has been earmarked for the RM2.32 billion LIKE project. Ekovest's 70%-owned subsidiary Lebuhraya DUKE Fasa 2A Sdn Bhd signed the concession agreement for the project in March this year. Construction of the 7.7km expressway is slated to begin in the first quarter of 2027, to be completed by the fourth quarter of 2030.
Another RM100 million will be set aside to repay Ekovest's RM1.07 billion borrowings as at Aug 12, which is estimated to yield annual interest savings of RM6.54 million.
The remaining funds will go towards the group's EkoTitiwangsa development (RM45 million) and the Setiawangsa-Pantai Expressway (SPE) (RM45 million), working capital (RM14.05 million) and estimated expenses for the exercise (RM1.8 million).
The proposed rights issue requires approval from Bursa Malaysia for the listing of new shares and from Ekovest shareholders at an extraordinary general meeting.
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