Tuesday, October 8, 2019

Lin See Yan's take on our economy

I find that this morning's interview by BFM with Lin See Yan on the current state of the economy is pretty straight forward.

Here's the link.


Michael Lee said...

Hi Felicity,
WCE project cost has increased to RM6.69b, hence the equity that need to be injected in is RM1.56b.

Up to date, they have raised RM721m, means they have to raise another RM886m. The latest right issue is only able to raise about RM320m.

Do you think there will be another round of cash call for the remaining RM566m ?


felicity said...

hi Micheal

It is never confirmed the rights issue will cover all expenses. This round they are raising RM480m not RM320m.

There is potential to raise further - RM80 million, through the conversion of the convertible. As WCEHB only owns 80%, its portion is lower by 20%, not the amount you mentioned. WCE has options to tap on its other businesses to cover the shortfall if any. I think if it needs to further need funds, this exercise should suffice.

Michael Lee said...

Thanks for reply. I quote this from the circular page 16 and 17, dated 25 July 2019.
"Based on our company's 80% equity interest in WCESB, our company is required to inject RM1.56b in the form of equity, convertibles and/or subordinated advances into WCESB, in order to fulfill our share of the Equity Contribution.

As at LPD, our company has injected RM721.66m into WCESB.....

Your boards intends to fund the remaining RM886.27m in the following manner :
(a) approximately RM320m through the proceeds to be raised from the Proposed Rights Issue of RCPS, and
(b) the remaining balance of RM566.27m through a combination of proceeds to be raised from the conversion of the RCPS under Option 1 and the exercise of the warrants, if any, and other sources of funds which are deems suitable and appropriate at that juncture. "

From the above, is there a high possibility of another round of cash call as the conversion of the convertibles 80m is also not enough to cover the RM566m ? What is your view?


felicity said...

hi Micheal
Don't think they have a straight answer to this. They may also rely on other revenue to fund this gap. They also mentioned that there is a possibility of the amount could be lower as they are appealing for the higher amount of land acquisition at court.