Press Metal plans placement to raise up to RM1 billion for working capital and capital expenditure

KUALA LUMPUR (March 21): Press Metal Aluminum Holdings Bhd (PMAH) plans to raise up to RM1 billion, placing up to 163.4 million new shares or 2% of its issued shares to third-party investors, to use as capital, its capital expenditure (capex) and to repay its loans.

The funds will primarily be used for group working capital, capital expenditures and loan repayments, PMAH said in a stock exchange filing Monday.

While the actual issue price of the Placement Shares will be determined and announced at a later date, the Placement currently assumes an issue price of RM6.12 per share for illustrative purposes.

Of the proceeds of RM1 billion, the bulk or RM670 million will be used for working capital, which is intended to finance the day-to-day operations of the group.

This, according to the PMAH, is mainly due to an increase in raw material purchases due to a general increase in prices coupled with the disruption of logistics following the Covid-19 pandemic and the Russian-Ukrainian conflict, which has also resulted in the group having to maintain higher inventory levels.

It then plans to set aside RM210 million for investments such as its extrusion and smelting operations, as well as its sustainability projects.

The remaining RM120 million will be used to repay bank borrowings, including commercial working capital lines, bankers’ acceptances or group term loans.

Based on the audited consolidated statements of PMAH as of December 31, 2021, the group’s gearing will decrease from 1.29 times to 1.01 times after the proposed placement, while earnings per share will increase from 5.7 sen to 5.6 sen.

PMAH believes that the proposed placement will allow the company to raise additional funds without incurring interest charges or principal repayments. It is also a quick way to raise funds in the capital market compared to other alternative fundraising methods.

The exercise, which would broaden PMAH’s capital base, should strengthen the financial positions of the group and its subsidiaries.

He expects the exercise to be completed by the second quarter of this year.

PMAH shares closed unchanged at RM6.35, giving it a market capitalization of RM51.28 billion. The stock is up 12.19% year-to-date to RM5.66.