Malayan Cement Bhd to repay borrowings with share placement

Malayan Cement Bhd is expected to raise MYR226.95m (US$55m) mainly to repay bank borrowings via a proposed placement of up to 85m shares, representing 10 per cent of the company's issued shares as of 14 April 2021. The total fund is based on the illustrative issue price of MYR2.67 per placement share, said Malayan Cement.

Malayan Cement said MYR53.93m out of the total proceeds would be used for working capital, MYR170m will be used to repay bank borrowings, and MYR3m to defray estimated expenses relating to the proposed placement.

Post-placement, the company’s total borrowing is expected to be reduced to MYR759.62m from MYR929.62m, bringing the gearing ratio lower to 0.30 times from 0.41 times as at 30 June 2020, reports Malayan Mail.

On the outlook for the sector, it said over the longer term, Malaysia as a developing nation with a positive population growth and increasing urbanisation creates an intrinsic need for infrastructure development, thereby supporting the long-term stability and growth of the building materials industry.

It said the Malaysian construction sector is expected to rebound in 2021 driven by the acceleration and revival of major infrastructure projects as the country recovers from the adverse impact of COVID-19.

The potential revival of previously delayed large-scale infrastructure projects would release pent-up demand, translating into growth in the construction sector and, consequently, demand in cement and concrete products, it added.