By RAHIMI YUNUS

HSS Engineers Bhd is anticipated to raise RM84.29 million through private placement and rights issue, to fund part of its acquisition plan of the overall equity interest in SMHB Engineering Sdn Bhd, which was declared on Sept 29, 2017.

The engineering and project management consultant is proposing to raise up to RM52.3 million through the placement of new shares for investors.

The company announced that it will issue up to 31.91 million new rights shares on the basis of one rights share for every 10 shares held, in a filing to Bursa Malaysia last Friday.

The rights issue exercise is tied with a bonus issue of up to 15.95 million new shares on the basis of one bonus share per every two rights shares subscribed, and up to 47.86 million free detachable warrants on the basis of three warrants for every two rights shares subscribed.

“These proposed rights with bonus issue and warrants are expected to raise gross proceeds of RM31.91 million at a price later to be determined by the board,” HSS said in the announcement last week.

The company further declared that the acquisition sum will be funded through RM85 million in bank borrowings.

HSS went into a share sale deal with shareholders of SMHB Engineering, to buy a stake of RM270 million that will be fulfilled through the issuance of 94.7 million new shares at the price of RM1.14 a piece and RM162 million cash.

The company said the purchase interest landed after taking into consideration the revised profit after tax of SMHB Engineering and its subsidiaries to about RM28.9 million for the financial year ended in April 30, 2017, and gains prior to interest, tax, depreciation and amortisation of SMHB Engineering of about RM36.7 million for the same interval.

SMHB Engineering will follow an internal restructuring exercise to aid the takeover by HSS. The proposed acquisition represents a strategic opportunity for HSS to expand its engineering consultancy services into the water resources and water supply development sectors, while complementing its strengths in the transportation, infrastructure and highways sectors.

The stake buy agreement will increase HSS’ orderbook from the present RM400 million to RM738 million — expanding its workforce from 600 to over 1,000 employees.

HSS perceives advancement opportunity in the water industry given the strong support from the government through the 11th Malaysia Plan, which offers expansion and investment commitment in new water and sewerage networks, not to mention treatment.

HSS’ stocks closed at RM1.17 per share, with an increase of 1.74% or 0.02 sen at market capitalisation of RM373.32 million last Friday.