Pharmaniaga Bhd’s shares fell 16% today even as it wrapped two key corporate proposals crucial to lifting the pharmaceutical group from its Practice Note 17 (PN17) classification.
Its shares fell 3.5 sen to close at its intra-day low of 18 sen, giving it a market capitalisation of RM883 million. It was the 11th most actively traded stock with 51.8 million shares changing hands.
The only major developments today were two bourse filings by the company providing further details on its rights issue and private placement proposals.
In May, Bursa Malaysia Securities granted Pharmaniaga a three-month extension to Aug 29 to implement its PN17 regularisation plan, which comprises a RM520 million capital reduction, a rights issue, and a private placement.
A massive impairment caused by its failure to offload RM552 million worth of Covid-19 vaccines sent Pharmaniaga tumbling into PN17 status in February 2023.
The impairment led to its largest ever quarterly net loss of RM664.39 million for Q4 FY2022.
A back-of-the-envelope calculation indicates the two corporate exercises raised a total of RM569.5 million, which will help to regularise the group’s financial condition.
Pharmaniaga previously estimated total gross proceeds to be raised from the rights issue and private placement at a minimum of RM560.9 million to a maximum of RM641.4 million.
However, these exercises are also highly dilutive with about 5.1 billion new shares added to the share base. Today’s announcements confirmed the new shares will be listed on July 31, which may explain the drop in the share price today.
Pharmaniaga previously unveiled a renounceable rights issue of up to 3.52 billion shares at 10 sen per share on the basis of 12 rights shares for every five existing shares.
Today’s filing revealed 3.45 billion new shares were issued at the completion of the exercise, raising an estimated RM345.9 million.
The company also confirmed the placement to “third-party investors” resulted in the issuance of 1.65 billion new shares at 13.5 sen per share, raising some RM223.6 million.
The placement shares were at a 6.6% discount based on the five-day volume-weighted average market price of Pharmaniaga shares of 14.46 sen as at June 16.
Today’s announcement did not provide details on who the third-party investors were.
However, a recent report in The Edge weekly said textile wholesaler and retailer Jakel Group, Great Eastern, Koperasi Angkatan Tentera Malaysia Bhd, and shipping tycoon Halim Mohammad, were parties interested in taking up the placement shares, according to sources.
