APB Resources Bhd has proposed to undertake a private placement of up to 10% of the total number of issued ordinary shares at an issue price to be determined and fixed at a later date, according to a Bursa filing dated Dec 27.

The mechanism to set the issue price of each tranche of the placement shares will be determined separately in accordance with market-based principles.

The independent third-party investors acquiring the placement shares will also be identified at a later date.

The application in relation to the proposed private placement is expected to be made within two months from the date of the announcement.

The private placement exercise is expected to be completed by the second half of 2025.

Pursuant to Sections 75 and 76 of the Companies Act 2016, the general mandate for the private placement exercise was obtained from the shareholders at APB's 22nd Annual General Meeting (AGM) convened on 23 September 2024, authorising the board to allot and issue new APB Shares not exceeding 10% of the total number of issued shares.

The shareholders have agreed to waive the statutory pre-emptive rights of the shareholders of APB under Section 85 of the Act, together with Clause 55 of the constitution of the company, to be offered new shares ranking equally with existing issued shares arising from any issuance of new shares pursuant to the general mandate.

APB has an issued share capital of RM112,875,002 comprising 112,862,960 APB equity shares and 12,042 treasury shares. The company could potentially issue up to 11,287,500 placement shares which account for 10% of the issued share capital.  

Concerning the pricing of the placement shares, the company will take into consideration the prevailing market conditions and the provisions of the main market listing requirements in determining the issue price of the placement shares at a discount of not more than 10% to the volume weighted average market price (VWAMP) of APB shares for the five (5) market days immediately preceding the price fixing date.

For illustrative purposes, assuming the placement shares are issued at an indicative issue price of RM0.307 per placement share, the issue price would represent a discount of approximately 9.71% or RM0.033 to the 5DVWAMP of APB shares up to and including the latest practicable date (LPD) of RM0.340. Hypothetically, the issued placement shares total at 11,286,000 shares (9.99% of issued share capital).

In theory, the proposed private placement will raise gross proceeds of RM3.46 million based on the issue price.

As at 5:00pm on Dec 27, APB's stock price stood at RM0.33. (Stock updates from Bursa Malaysia)

After settling the expenses associated with the proposed private placement, the remainder of RM3.325 million in proceeds is expected to be utilised within six months to procure materials for fabrication activities and to pay subcontractors at the group's fabrication manufacturing plants located in Kuantan, Pahang.

Looking ahead, APB will continue to focus on its core business of fabricating high-quality process equipment for the oleochemical, oil and gas, energy, and petrochemical sectors, and will actively increase its production capacity to capitalise on the rising market demand. The group has also implemented key measures to enhance operational efficiency and stay competitive, including optimising manpower requirement, refining cost structure, and improving resource allocation.

As of 18 December 2024, APB has secured fabrication orders valued at RM125.32 million.