HSS Engineers to raise up to RM84.29 million via private placement, rights issue to fund water industry venture

PETALING JAYA: HSS Engineers Bhd (HEB) proposes to undertake a private placement and rights issue to raise up to RM84.29 million to fund its foray into the water industry.
HEB has entered into a conditional shares sale agreement to acquire the entire stake in SMHB Engineering Sdn Bhd for RM270 million, which will be satisfied via RM162 million cash and and the issuance of 94.74 million new shares at an issue price of RM1.14 per share.
The group told Bursa Malaysia that it will issue up to 31.91 million new rights shares on the basis of one rights share for every 10 shares held.
The rights issue exercise will be accompanied by a bonus issue of up to 15.95 million new shares on the basis of one bonus share for every two rights shares subscribed as well as up to 47.86 million free warrants on the basis of three warrants for every two rights shares subscribed.
Meanwhile, a total of 52.3 million placement shares will be placed out to investors identified at a later stage.
Both private placement and rights issue are expected to raise up to RM52.3 million and RM31.91 million respectively.
The acquisition sum will also be funded via bank borrowings of RM85 million.
SMHB is principally an engineering consultancy company providing civil, structural, mechanical and electrical consultancy services.
HEB said the purchase consideration was arrived at after taking into consideration the adjusted profit after tax of SMHB and its subsidiaries of about RM28.9 million for the financial year ended April 30, 2017 as well as earnings before interest, tax, depreciation and amortisation (ebitda) of about RM36.7 million for the same period.
It noted that the proposed acquisition will combine the strengths of two leading Malaysian engineering consultancy firms to be a key contender to undertake projects not only in Malaysia but in the international market.
"The order book of the HEB group would increase significantly from approximately RM400 million currently to RM738 million after the proposed acquisition," it said, adding that the group's workforce will increase to over 1,000 employees from the current 600 employees.
At 3.31pm, HEB shares fell one sen or 0.87% to RM1.14 on some 244,000 shares done.