Trive Property plans another cash call to fund acquisition and pare down term loan

KUALA LUMPUR (Oct 7): Trive Property Group Bhd intends to raise up to RM63.77 million — higher than its market capitalisation of RM56.41 million — through a rights issue with warrants, mainly to fund the acquisition of the remaining 40% stake in a subsidiary and to repay its term loan.

This will be the group's third cash call this year, after it completed two private placements in May and June, which involved up to 30% and 10% of its issued shares, respectively.

The placements raised RM4.1 million and RM2.5 million, respectively, used mainly to repay borrowings and for working capital.

In a filing with Bursa Malaysia today, Trive Property said it is acquiring the remaining 40% equity interest in Avenue Escapade Sdn Bhd (AESB) from Ong Kah Hoe and Ong Kah Wee for RM9.9 million — to be funded by the proceeds of the rights issue.

AESB is principally a property investment holding company which owns a 19-storey commercial office building in Petaling Jaya with Multimedia Super Corridor status known as Menara Persoft.

Trive Property acquired the other 60% stake in AESB for RM17.36 million last year.

Prior to the implementation of rights issue with warrants, Trive Property said it plans to consolidate every 25 of its shares into one share, which would result in an adjustment to its share price.

For illustration purposes, based on the company's last transacted market price of 2.5 sen per share, the adjusted reference price would be 62.5 sen post consolidation.

Meanwhile, the renounceable rights issue will be undertaken on the basis of 12 new shares with seven free warrants for every two consolidated Trive Property shares held at an entitlement date and issue price to be fixed later.

Based on an illustrative issue price of seven sen per rights share, the group expects to raise up to RM63.77 million.

The bulk of the proceeds, amounting to RM51.6 million, will be used for the repayment of the term loan, while RM9.99 million will be utilised to finance the acquisition of the 40% stake in AESB.

A further RM1.39 million from the proceeds will be used for working capital and the remaining RM800,000 will go towards defraying expenses associated with the cash call exercise.

Trive Property said that as at July 31, the outstanding amount of its term loan was RM51.6 million. The full payment of the loan will reduce the group's interest coverage and gearing ratios to zero, thereby improving its financial position and providing the group with greater capacity to obtain fresh debt funding, if required, for its future plans, the group said.

In addition, the group said it has procured undertakings from its shareholders Datuk Kua Khai Shyuan (executive director of the company) and Ho Jien Shiung to subscribe in full for their respective entitlements under the rights issue with warrants, in a bid to meet the minimum subscription level for the cash call.

Subject to all relevant approvals being obtained, the proposals are expected to be completed by the first quarter of 2021, the group said.

Trive Property's share price closed unchanged at 1.5 sen today, valuing the group at RM56.41 million. Some 2.75 million shares were traded.