KUALA LUMPUR (April 8): Loss-making VSolar Group Bhd is planning to diversify its business to include sales and trading of spare parts for railway vehicles, and plans to raise funds from a rights issue with free warrants for the new venture.
The company is presently principally involved in the trading of information, communication, technology products such as computer hardware and software solutions. It also provides engineering solutions in connection with renewable energy and other related engineering work, as well as the supply of solar energy.
In a bourse filing Friday (April 8), VSolar said the diversification follows its unit’s acceptance earlier this year of a sub-contract job worth RM96.27 million from RA Intergration Links Sdn Bhd (RAIL), a wholly-owned Prasarana Malaysia Bhd unit, for the procurement and supply of spare parts for the intermediate overhaul of 50 sets of Ampang six-car light rail vehicle for the LRT Ampang Line.
“Although the company has only secured one contract for the supply of spare parts as at the latest practical date (LPD), the group intends to commit resources to eventually grow and make the railway business as one of its core businesses moving forward by providing installation, assembly and testing of spare parts and other railway related parts/systems,” VSolar said.
While VSolar expects the railway business to be a major contributor of the group’s revenue in the future, it intends to continue with its existing business now, though it will continuously review its operations to further improve its financial performance.
“The railway business is not expected to incur significant capital outlay to the group at this juncture or any upfront cost to be provided by Vsolar to commence the railway business, as the company is purely involved in the sales and trading of spare parts,” it said.
The group plans to finance the new venture using internal funds and proceeds to be raised from the rights issue. Prior to the cash call, VSolar wants to consolidate every existing 30 shares into one VSolar share.
As for the cash call, it will involve the issuance of renounceable rights issue of up to 791.85 million new shares, together with up to 395.92 million free detachable warrants. This will be issued on the basis of four rights shares and two Warrants C for every one consolidated share held by entitled shareholders at a date to be decided.
The company intends to raise up to RM79.18 million from the proposed rights issue, which it plans to use for its new railway business, as well as its existing solar photovoltaic leasing business.
VSolar also noted that the warrants, if exercised at an indicative price of 10 sen each, will raise up to RM39.6 million, which the company may use for capital expenditure, investments, and/or working capital of the group.
The proposals, which require shareholders’ consent at an upcoming extraordinary general meeting, are expected to be completed in the second half of 2022.
VSolar’s share finished 50% or half a sen higher at 1.5 sen on Friday, giving the group a market capitalisation of RM72.52 million.
