Tuesday, September 6, 2011

Dijaya ... Sep11

Dijaya Corporation Bhd’s proposed private placement exercise will help it grow with minimal borrowings and allow higher institutional ownership of the company.

It proposed a 30% private placement exercise, amounting to between 136.91 million and 177.47 million shares, depending on the level of outstanding warrants and employees share option scheme.

An issue price has yet to be announced but will be determined based on the five-day volume weighted average market price (VWAMP) immediately prior to the price fixing date, with a discount not more than 10% and a minimum price of RM1.00, the par value of Dijaya’s shares. The VWAMP as of Aug 17 2011 was RM1.49. Using this as an indicative price, Dijaya can expect to raise between RM199.49 million and RM258.83 million.

The private placement will help it partially finance our recent land acquisitions without placing pressure on its gearing which it hopes to keep below 0.5 (times). The private placement will result in a gross gearing of between 0.24 and 0.19 times. However, as payment becomes due on acquisitions, that ratio may rise.

It had purchase of 227 acres (90.8ha) in Plentong, Johor Bahru for RM220 million for a project to be called Tropicana Danga Cove.

It has a net cash of RM240 million in cash and only RM211 million in borrowings.

It is currently talking to a wide range of investors, both local and foreign for the private placement.

If the placement goes according to plan, CEO Tan Sri Tan Chee Sing’s ownership will be diluted from 67.03% to 51.56%. The placement will pave the way for institutional investors to increase their stakes in Dijaya, which has been held firmly by Tan for a long time.

TAEL One Partners Ltd acquired a 5% stake in Dijaya on July 4 2011, and has since raised its stake to 7.25%.

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