Property News

Ecobuilt plans capital reduction and rights issue

KUALA LUMPUR (Jan 28): Loss-making construction company Ecobuilt Holdings Bhd (KL:ECOHLDS) has proposed a share capital reduction to wipe out its accumulated losses, as well as a rights issue to raise fresh capital.

The capital reduction exercise will involve reducing RM35 million of its RM67.96 million share capital, according to the company’s bourse filing on Tuesday.

The move is expected to eliminate the company’s RM29.45 million accumulated losses at end-August 2024, leaving it with pro forma retained earnings of RM5 million.

Meanwhile, Ecobuilt intends to undertake a rights issue of 420.72 million shares with free detachable warrants, to raise fresh capital after capital reduction.

The rights issue will be on the basis of one new share for every one share held, with one warrant for every one rights share subscribed. The issue price for the rights shares will be determined later.

Assuming an issue price of two sen per rights share, the exercise is expected to gross proceeds of up to RM8.41 million, with RM5.49 million going towards working capital and RM2.38 million to repayment of borrowings, the company noted. 

The remainder will be for defraying the costs of the exercises.

If approved by shareholders at an upcoming extraordinary general meeting, the exercises are expected to be completed by the second quarter of 2025.

UOB Kay Hian Securities (M) Sdn Bhd has been appointed as the adviser for both exercises.

Ecobuilt has been in the red for three consecutive financial years. Its net loss in the 15-month financial period ended Aug 31, 2024 (15MFY2024) stood at RM46.2 million. 

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Source: EdgeProp.my