DNeX to raise funds for SilTerra buy

Proposed share placement exercise entails an issuance of up to 30% of DNeX’s total number of issued shares


DAGANG NeXchange Bhd (DNeX) has announced plans to undertake a private placement to raise up to RM700.81 million to partly finance its proposed 60% stake acquisition in SilTerra Malaysia Sdn Bhd from Khazanah Nasional Bhd.

The company, in a bourse filing yesterday, stated that the proposed share placement exercise entails an issuance of up to 30% of DNeX’s total number of issued shares at an issue price to be determined later.

DNeX’s total issued share capital stood at RM473.66 million comprising 2.19 billion DNeX shares at present. The total number of shares for the proposed private placement may amount to 891.61 million shares if its issued shares rise to 2.97 billion.

Based on an indicative issue price of 78.6 sen per share, the proposed private placement is expected to raise gross proceeds of up to RM700.81 million, which will be utilised to partly or fully finance the acquisition and additional general working capital for the group.

In a separate statement, DNeX announced that the company and Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre entered into a conditional share sale and purchase agreement with Khazanah yesterday for the acquisition for a purchase consideration of RM273 million in cash.

The purchase consideration — attributable to DNeX’s 60% interest in the sales share — amounts to RM163.8 million which will be funded by DNeX via a combination of proceeds to be raised from the proposed private placement, internally generated funds and/or bank borrowings.

DNeX group MD Datuk Tahir said the deal underlined the company’s strength and capabilities as a turnaround specialist that will be able to create value on inherent competencies and resources of SilTerra.

“The acquisition is part of DNeX’s expansion and diversification plan. Being in the manufacturing industry, the consolidation of SilTerra’s financial performance, which is in the form of recurring income from its manufacturing contracts, will complement DNeX existing earnings,” he said.

“We believe SilTerra can ride on the current shortage in the global semiconductor market and demonstrate a better financial performance in the coming years,” he said, adding that the company has set a two-year time frame to turn SilTerra around.

According to the Semiconductor Industry Association, the global semiconductor market has shown resilience to headwinds caused by the Covid-19 pandemic and other macroeconomic factors. Global sales of semiconductors are expected to further grow by 8.4% in 2021, from an increase of 5.1% in 2020.

DNeX shares ended half-a-sen higher at 91 sen yesterday, with 99.2 million shares changing hands. The company has a market valuation of RM2.01 billion.