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Luster to raise up to RM47m via private placement for manufacturing business

Luster to raise up to RM47m via private placement for manufacturing business

11 Sep 2020

Luster Industries Bhd has proposed a private placement to raise between RM30.35 million and RM47.19 million for general working capital, including for the purchase of raw materials.

The placement entails an issuance of up to 20% of the plastic products manufacturer’s issued shares to a third-party investor to be identified later, at an issue price also to be announced later, the group said in a bourse filing today.

“The placement shares will be issued at a price of not more than 10% discount to the five-day volume weighted average market price (VWAP) of Luster shares immediately preceding the price-fixing date,” it added.

For illustrative purpose, Luster said the indicative issue price is assumed at 12.8 sen per share, which represents a discount of 9.41% to the five-day VWAP of 14.13 sen on Sept 3.

The group had, between Oct 16, 2019 and April 10 this year, raised RM11.18 million through two tranches of private placement for its property development and manufacturing segments.

These funds, the group noted, had been fully utilised according to the intended purposes.

Meanwhile, Luster said it aims to become an original equipment manufacturing player for audio systems, having commenced the manufacturing of the new products in July.

In view of this, the group said it has decided to undertake another fundraising exercise to finance the expansion of the manufacturing business segment.

“After due consideration of the various methods of fundraising, the board opines that the proposed private placement is the most appropriate avenue of fundraising against conventional bank borrowings as it enables the company to raise additional funds without incurring interest costs, which will increase the group’s debt repayment obligation,” it added.

Luster’s share price settled half a sen or 4.17% higher at 12.5 sen, with a market capitalisation of RM271.7 million. Some 19.35 million shares were traded.

Source: The Edge Markets Posted on : 11 September 2020