Pharmaniaga unveils robust RM655m regularisation plan

One noteworthy aspect of the plan is the commitment from LTAT to subscribe to up to RM190m for the rights issue 


PHARMANIAGA Bhd has unveiled a comprehensive regularisation plan, marking a pivotal step towards strengthening its financial position and exiting Practice Note 17 (PN17) status. 

The move, outlined in the requisite announcement (RA) submitted to Bursa Malaysia last week, encompasses various initiatives aimed at fortifying the company’s fiscal health and creating a robust foundation for future growth. 

The key highlights of Pharmaniaga’s regularisation plan include a targeted fundraising of up to RM655 million. 

This amount will be raised through a combination of a rights issue amounting to RM355 million and a private placement totalling RM300 million. 

These financial manoeuvres are designed to inject capital into the company, providing essential resources for its revitalisation efforts. 

One noteworthy aspect of the plan is the commitment from substantial shareholder Lembaga Tabung Angkatan Tentera (LTAT) to subscribe to up to RM190 million for the rights issue. 

This substantial support from a key stakeholder underscores confidence in Pharmaniaga’s strategic direction and further solidifies its commitment to achieving financial rejuvenation. 

The regularisation plan involves a capital reduction process, an essential step in adjusting the company’s share capital to better align with its financial goals. 

Concurrently, a rights issuance is proposed, offering existing shareholders the opportunity to reinforce their investments in Pharmaniaga. 

Additionally, a private placement exercise is introduced, opening avenues for potential investors to participate in the company’s growth and value-creation plans. 

Pharmaniaga chairman Izaddeen Daud noted the significance of these strategic measures in a statement. 

“We wish to announce our decisive step towards financial rejuvenation by announcing the RA today (Nov 29), which signifies a 

strategic milestone in the turnaround of Pharmaniaga. The robust commitment from LTAT validates our approach and strengthens our resolve,” he said. 

A critical component of the regularisation plan is the comprehensive review of Pharmaniaga’s business segments. 

The company has proactively addressed challenges by taking prudent steps, including a total impairment of RM167 million during the third quarter of the financial year ending on Sept 30, 2023 (3Q23). 

This impairment includes a prior year adjustment of RM121 million. The impairment decision was driven by factors such as stock obsolescence related to pandemic-related consumables inventory. Items like personal protective equipment and needles, procured to meet emergency health facilities needs during the height of the pandemic, experienced a decline in demand as the situation improved.

Izaddeen explained: “Concurrent with this strategic move, we have completed a review of our balance sheet and made the decisive action to impair and provide for certain assets of the company. 

“This proactive move is integral to our action to reset Pharmaniaga, reflecting a commitment to fiscal responsibility, transparency, operational efficiency and adhering to corporate governance.” 

Despite the impact of the impairment, Pharmaniaga views it as a necessary step in its journey towards improving financial health and uplifting its PN17 status. 

Izaddeen reiterated the company’s belief that these measures will lay the groundwork for a more resilient and robust future, ultimately creating better value for shareholders. 

“With a well-prepared strategy and the upcoming submission of the regularisation plan to Bursa Malaysia, we are confident in emerging from this tough period stronger and in a more favourable financial position,” he added.

  • This article first appeared in The Malaysian Reserve weekly print edition