1. INTRODUCTION
Reference is made to the utilisation of proceeds raised from Initial Public Offering (“IPO”) as disclosed in the Company’s Prospectus dated 8 June 2021 issued in conjunction with the listing and the quotation of the Company’s entire share capital on the ACE Market of Bursa Malaysia Securities Berhad on 29 June 2021 ("Date of Listing"). The Company has raised a total gross proceeds of RM45.07 million from its IPO (“IPO Proceeds”).
The Board of Directors of the Company (“the Board”) wishes to announce that it has deliberated and resolved to vary the utilisation of IPO Proceeds and to extend the timeframe for the utilisation of the IPO Proceeds for an additional of 6 months from the date of this announcement (“Variations and Extension”).
2. DETAILS OF THE VARIATIONS AND EXTENSION
As at the date of this announcement, the Company and its subsidiaries (“Nestcon Group”) has utilised approximately RM39.07 million from the total of IPO Proceeds. The Company has yet to fully utilised the IPO Proceeds allocated for the below purposes which were initially intended to be utilised within 24 months from the Date of Listing. The details of the Variations and Extension are set out as follows:
Purpose
|
Proposed Utilisation of Proceeds
(RM’000)
|
Actual Utilisation
(RM’000)
|
Balance Unutilised
(RM’000)
|
Revision of Balance Unutilised
(RM’000)
|
Initial Timeframe for the Utilisation of IPO Proceeds
(From Date of Listing)
|
Revised Timeline for the Utilisation of IPO Proceeds
|
Establish IBS facility for our building division
|
6,000
|
-
|
6,000
|
(6,000)(1)
|
Within 24 months
|
-
|
Acquire machineries and equipment for our business expansion in the civil engineering and infrastructure division
|
6,615
|
(6,615)
|
-
|
-
|
Within 24 months
|
-
|
Upgrade software and systems
|
1,000
|
(1,000)
|
-
|
-
|
Within 12 months
|
-
|
Repayment of bank borrowings
|
16,500
|
(16,500)
|
-
|
6,000(1)
|
Within 3 months
|
Within 6 months from 29 May 2023(2)
|
Working capital
|
10,953
|
(10,953)
|
-
|
-
|
Within 12 months
|
-
|
Listing Expenses
|
4,000
|
(4,000)
|
-
|
-
|
Within 1 month
|
-
|
Total
|
45,068
|
(39,068)
|
6,000
|
|
-
|
|
Notes:
(1) The balance of unutilised proceeds of RM6.00 million for Establish IBS facility for our building division will be reallocate for Repayment of bank borrowings.
(2) Being 29 months from the expiry date of the initial timeframe of the utilisation of IPO Proceeds.
|
3. RATIONALE FOR THE VARIATIONS AND EXTENSION
As referred to the table above, Nestcon Group has yet to utilise the IPO Proceeds of RM6.00 million allocated for Establish IBS facility for our building division (“IBS Facility”).
As disclosed in the Prospectus, the Company intended to utilise RM6.00 million to establish own IBS facility by setting up an on-site casting yard to produce hollow core-slabs, half slabs and precast bathroom units in a suitable project site. Unfortunately, due to a recent change in development plans by the developer, hence, the land is not available to assign to the Company for this purpose.
In light of this development, the Company has decided to reallocate the funds and has chosen to utilise RM6.00 million to partially repay the outstanding invoice financing balances with Hong Leong Bank Berhad. The current outstanding amount of this financing stands at RM7.86 million. This invoice financing was previously taken to finance the working capital. This decision has been made in consideration of the higher interest rate associated with the invoice financing facility compared to other banking facilities. The repayment of these balances will play a significant role in optimising the Company's financial position and reducing interest costs.
After careful consideration, the Board has decided to extend the timeframe for the utilisation of IPO Proceeds for an additional of 6 months from 29 May 2023 and to reallocate the funds initially intended for the IBS Facility towards the repayment of the bank borrowings. This decision was made to ensure responsible financial management and to fulfill existing financial obligations.
4. APPROVAL REQUIRED
The Variations and Extension is not subject to any regulatory authorities or shareholders’ approval. Nevertheless, the Board shall continue to be vigilant and prudent in managing the IPO Proceeds and will continue to disclose the status of the utilisation of the IPO Proceeds in its quarterly results and annual report until it is fully utilised.
The Board is of the opinion that the aforementioned Variations and Extension will not have any adverse effect on the financial performance of the Company and it is in the best interest of the Company.
This announcement is dated 29 May 2023.