IOI Corp plans RM1.2b cash call

From The Business Times:

Plantation group IOI Corp Bhd (1961)plans to ask as much as RM1.22 billion from shareholders to fund its spending, investment opportunities and repay some of its debts.

IOI Corp plans to use the money within two years upon receiving it but has yet to determine how much will be for capital expenditure and debt repayment.

However, it will ask its single biggest shareholder, Progressive Holdings Sdn Bhd, to buy all of the shares under its entitled portion. Progressive, owned by Tan Sri Lee Shin Cheng's family, holds 40.64 per cent of IOI Corp.

"The proposed rights issue will enable the company to raise the requisite funds without incurring additional interest expenses as well as to minimise any potential cash outflow in respect of interest servicing," it said in a statement to Bursa Malaysia yesterday.

IOI Corp has proposed to issue up to 420.99 million new shares under a renounceable rights issue priced at RM2.90 per share. It will be done on the basis of one rights share for every 15 existing shares.

Shares of IOI Corp closed 4 sen up to RM4.98 yesterday.

It expects to conclude the proposal by year-end. The plan will need the approval of its shareholders, the Securities Commission and Bursa Malaysia, among others.

However, the final number of its rights shares may change, taking into account new shares that could be issued under a stock option scheme and the conversion of an exchangeable bond programme.

Looks like companies still need to raise cash. I don't think we've seen the end of the cash raising times yet. With an anemic recovery, companies will realize it will be tough going for quite some time.