KUALA LUMPUR (June 3): Counters linked to Serba Dinamik Bhd’s group managing director and chief executive officer Datuk Dr Mohd Abdul Karim Abdullah are feeling the heat of the accounting issues at the oil and gas services and engineering group.
It is not just about the drop on their share prices, but their fundraising exercises will be hit.
Both KPower Bhd and Sarawak Consolidated Industries Bhd (SCIB) have pending private placement exercises in the works, both having received Bursa Securities’ approval for their respective exercises recently.
However, both have also seen sharp drops in their share prices after the audit issues at Serba Dinamik were made known to the investing public, given that Mohd Abdul Karim holds substantial stakes in these companies.
KPower, in which Mohd Abdul Karim holds 146.38 million shares or a 32.36% equity stake, said in the filing with the stock exchange that it received the bourse’s approval of its private placement exercise, following the submission of the company’s application to issue up to 120.62 million shares on May 25.
The company had proposed the fundraising exercise on May 24, seeking to raise gross proceeds of up to RM100 million to fund its recently secured 50 megawatt (MW) solar photovoltaic (PV) plant in Pahang, and mini hydro power projects.
It had initially proposed the issuance of approximately 48.78 million placement shares, with an illustrative issue price of RM2.05, equivalent to RM100 million.
However, its share price subsequently dropped from May 27 onwards, following news of audit matters raised by Serba Dinamik’s external auditor KPMG PLT in relation to the group’s sales transactions, trade receivables and material on site balances.
On May 31, KPower provided further updates and clarifications on the proposed private placement and said that it now intends to issue up to 120.62 million placement shares at a lower illustrative issue price of RM1.58.
It had on May 25 submitted its application for the listing of the placement shares, with the bourse subsequently granting its approval.
While its share price has seen a slight recovery since it dropped to a low of RM1.08 on May 31, the stock closed at RM1.22 on Wednesday, about 23% below the illustrative price RM1.58 it previously indicated.
This could mean that KPower may end up raising less than it planned under the private placement exercise while the issues at Serba Dinamik may potentially affect subscriber sentiment over the fundraising exercise.
Meanwhile, SCIB, in which Mohd Abdul Karim has 180.55 million shares or a 36.8% stake, had on May 3 proposed a private placement of up to 20% of its share capital to raise funds for capital expenditure requirements, working capital and estimated expenses for upcoming projects.
Based on an indicative issue price of RM1.5480, the company expected to raise gross proceeds of up to RM227.8 million.
On May 27, SCIB said that the exchange had approved the listing of and quotation for up to 147.15 million new shares to be issued pursuant to the private placement.
However, the counter has since fallen to 98 sen, about 37% below the indicative issue price of RM1.5480.
If the placement shares were issued based on its closing price of 98 sen, and assuming full subscription of its placement exercise, SCIB would only raise a maximum of approximately RM144.21 million.
