Vivocom to raise RM99m via private placement

The funds will be used as general working capital for its ongoing construction project and new development projects that the group will undertake

By LYDIA NATHAN / Pic source Vivocom FB Page

VIVOCOM International Holdings Bhd has announced a corporate exercise to undertake a private placement to raise about RM99.37 million and a bonus issue of up to 371.77 million free warrants to address its immediate and near-term cashflow requirements.

The company, in a Bursa Malaysia filing yesterday, stated that the proposed share placement exercise entails an issuance of up to 10% of its total issued shares.

Vivocom’s total issued share capital stood at RM418.75 million comprising 572.26 million of its shares, as at March 1, 2021.

Bursa Securities’ approval of Vivocom’s issuance of an additional 334 million shares recently meant the company’s number of issued shares has nearly doubled to 1.01 billion shares.

The actual number of placement shares to be issued in the proposed private placement will be determined and announced later.

The proposed private placement is expected to raise gross proceeds of up to RM99.37 million, based on the indicative issue price of 98 cents per placement share, the company said.

The funds will be used as general working capital for its ongoing construction project and new development projects that the group will undertake.

The expenses include the purchase of necessary construction materials, research and development costs, project management costs, operating and administrative expenses and staff-related expenses.

Vivocom recently secured a RM3.79 billion three-year contract for the supply of marine sand to a joint-venture contractor appointed to undertake reclamation works for the Hong Kong International Airport Three Runway System Project.

The contract was secured by V Development Group, where Vivocom’s subsidiary Rain International Sdn Bhd (RISB) owns a 97% stake. RISB will supply sand to Zhen Hua Engineering Co Ltd-China Communications Construction Co Ltd- CCC Dredging.

In a bourse filing, Vivocom said the project will commence on March 1, with the first consignment of sand expected to be loaded and shipped to RISB’s customer by the end of March.

The marine sand will be procured from Malayan Energistik Solutions Sdn Bhd (MESSB) via an extraction and supply agreement signed between MESSB and V Development.

MESSB is an authorised permit holder for the export of sand to overseas markets for three years, obtained on Oct 7, 2019, from Sabah’s chief minister department.

It said RISB has submitted the application for the K2 (export for dutiable and non-dutiable goods) permit to the Royal Malaysia Customs which is expected to be received by March 15.

Vivocom CEO Datuk Seri Chia Kok Teong (picture) said the sand contract is set to be a game-changer for the company as it gives them “tremendous visibility”.

“The potential revenue is huge, recurring, and highly scalable. I am optimistic the contract would be extended for another two to three years and could potentially generate revenue of up to RM6 billion,” he told The Malaysian Reserve.

The sand would be procured from an approved permit holder to export sand overseas, and sourced from concession areas in Sandakan and Sungai Beluran in Sabah and throughout Malaysia.

Chia said the current contract can be increased with a higher tonnage shipped every six months.

“The potential for explosive growth in the sand business is real and tangible, and bodes well for the company in forthcoming years. Besides the reclamation works for the Hong Kong International Airport, the rapid pace of construction and reclamation works in China and Singapore also requires heavy demand for sand, which is a considerable boon to Malaysia,” he said.

Chia said the company is also currently in negotiations for an additional sand contract worth RM3 billion.

“I have urged my team to secure up to RM10 billion worth of sand contracts by the end of 2021. This is part of our overall transformation strategy, which is to emerge as a multi-billion conglomerate,” he said.

Vivocom shares ended three sen or 2.94% higher at RM1.05 yesterday, giving the company a market valuation of RM600.87 million.