MRCB using RM541mil rights proceeds to buy land

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB), which has proposed a RM541mil fund-raising exercise via a rights issue, plans to use most of the proceeds to increase its land bank, especially in the Klang Valley.

Chief executive officer Mohamed Razeek Hussain said it would invest in land for further commercial and residential developments.

“The rights issue constitutes one of the key steps by MRCB to raise funds without incurring interest expenses from banks and a way to strenghten its balance sheet,” he told a briefing after the company’s EGM yesterday.

MRCB shareholders approved a 1-for-2 rights issue at RM1.12 a share to raise RM508mil to RM541mil. This represents a discount of about 13.2% from the thereotical ex-rights price of the five-day volume-weighted average market price prior to the price-fixing date on Nov 19.

Razeek said the timing was right to gear up for expansion as market conditions globally were recovering from the economic crisis.

He said the funds raised were purely for healthy business expansion and not to clear bank borrowings.

The rights issue is expected to increase MRCB’s capital from 907.63 million shares currently to between 1.36 billion and 1.44 billion shares.

“Based on our audited accounts as at Dec 31, 2008, MRCB’s gearing level would decline from 2.5 times to between 1.4 times and 1.2 times following the completion of the rights.”

MRCB chief financial officer Chong Chin Ann said the Employees Provident Fund, a 30% equity shareholder of the company, had taken up 130 million rights shares for slightly over RM150mil, while the rest would be backed by banks.

By The Star (by Danny Yap)