By MARK RAO
Trive Property Group Bhd will issue 500 million new ordinary shares in the company to Macquarie Bank Ltd to fund its proposed township development in Kerteh, Terengganu.
Under the conditional subscription agreement, the new shares will represent a 37.41% stake in the battery product producer that recently diversified into the property sector.
Trive retained 1.34 billion in issued shares as of May 23 this year.
In a filing to Bursa Malaysia yesterday, the company said the share issuance would raise RM60.5 million in proceeds, of which RM60 million would go towards funding the first phase of its Kerteh project.
The remaining RM500,000 would be utilised for expenses relating to the proposed share issuance.
“The share issuance will enable the company to raise additional funds without having to incur interest expenses or service principal repayments as with conventional bank borrowings or the issuance of debt securities. This will allow Trive to preserve cashflow for reinvestment and operational purposes,” it said.
The conditional subscription agreement is an expeditious way of raising funds from the capital market, com- pared to other forms of fund-raising, such as a rights issue exercise, it said.
Trive was appointed as the contractor for the first phase of the 66.96ha Bandar Baru Kerteh Jaya township by Pakadiri Sdn Bhd in September last year.
However, construction works were halted after Trive’s private placement raised less than a third of the RM7 million needed to fund the job.
The residential project has an estimated gross development value and cost of RM123 million and RM90 million respectively, and is expected to be completed within a three- year period.
“The Kerteh project is expected to contribute positively to the financial performance of the group through the additional income coming from the progress billings from the development,” Trive said. Meanwhile, Macquarie Bank said it did not intend to be a controlling shareholder in the company following the share issuance.
The Australia-based financial service provider added that it would not purchase or subscribe to Trive shares to the extent it would warrant a mandatory takeover offer or a similar corporate exercise.
The proposed share issuance is scheduled for completion within two years from the subscription commencement date.