Bangkok--3 Feb--Master Mind Communications
L.V. Technology Public Company Limited (LVT), the MAI-listed engineering consultancy with ongoing operations in various parts of the world, has decided to raise 350 million baht from a capital increase that will be used to fund new investments in the booming cement industry in Myanmar. The company expects the investments to generate recurrent income and profitability into the longer-term future.
LVT managing director Vichai Tantikulananta stated that the capital increase is crucial to support the next phase of the company’s corporate strategy in building permanent assets that can generate revenue and profits on a consistent basis in the long run -- as against the existing business model of having to constantly secure new engineering-services and consultancy jobs.
Of the targeted 350 million baht new funds from the planned capital increase, 265 million baht will be invested in an LVT subsidiary Ceminter Pte Ltd. which, together with another 176 million baht that had already been invested, will raise LVT’s shareholding in Ceminter to 51%.
Ceminter, in turn, will hold 30% in Max Manufacturing Co. Ltd., a Myanmar company now upgrading an old cement plant near Nay Pyi Taw that will come onstream this year with expanded production capacity of 1,500 tons per day. The remaining 85 million baht from the total targeted new funds will be used to support LVT’s business cash flow.
The joint venture with Max Manufacturing is seen as coming at an opportune time in view of Myanmar’s currently booming economy. The country’s cement industry has strong growth potentials because of the huge supply shortfalls against growing demand by the construction industry. Through Ceminter, LVT’s investments are expected to generate returns in the form of dividends starting in 2017.
Mr. Vichai stated that it is necessary to raise the new funds because earlier plans to raise money for investment in the Myanmar cement project could not be carried out due to the unfavorable stock-market conditions. The company’s shareholders early last year approved a 51-million-share private placement plus the conversion of LVT-W3 warrants, both at the placement and exercise price of 1.25 baht per share. But both schemes could not be executed because the LVT stock’s market prices had fallen way below the 1.25 baht target.
The company has now scheduled an Extraordinary General Shareholders Meeting (EGM) for March 11 to approve the package of new rights and warrants offerings which were decided at a Board of Directors meeting last Friday (Jan 31, 2014).
In official filing with the SET today (Feb 3, 2014), LVT stated that its Board decided to reduce the company’s registered capital by 51 million baht shares (since the previous PP could not be executed) and, at the same time, approved the increase of 807.677 million new shares. Out of the total new shares, 538.45 million will be allocated to existing shareholders at the ratio of about 1.28 old shares for 1 new share at 0.65 baht per share. This in effect will raise about 350 million baht in new funds.
The remaining 269.2 million new shares will be set aside to support the conversion of new warrants, LVT W-4, of the same amount over a four-year period , with those entitled to the warrants at the ratio of 2 new shares for one warrant. At the 1:1 conversion for one baht each, the company stands to raise another 269.2 million baht over the next four years if all warrants are exercised. The record date for entitlement to the rights offerings has been set for March 18.