RAM Ratings sees private placement announcement as credit positive for Peps-JV (Melaka) Sdn Bhd’s Investment Notes

Published on 07 Oct 2024.

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RAM Ratings views that the private placement exercise undertaken by its parent company, EP Manufacturing Berhad (EPMB) to be positive for EPMB, providing some upside to the R3 rating assigned to Peps-JV (Melaka) Sdn Bhd’s (PJVM) RM20 Million Investment Notes. The Investment Notes are backed by a corporate guarantee from EPMB. 

On 11 September 2024, EPMB announced that it will place out approximately 30% of the total number of issued shares, raising gross proceeds of around RM39.7 million. The shares will be placed out equally to two investors: Mutual Concept Sdn Bhd (MSCB) and Bermaz Capital Sdn Bhd (BCSB). MSCB is owned by Hamidon Bin Abdullah, the Executive Chairman and major shareholder of EPMB, who currently owns 4.11% direct and 11.88% indirect equity interest in EPMB. Meanwhile, BCSB is a wholly-owned subsidiary of Bermaz Auto Berhad (Bermaz). The private placement is expected to be completed in November 2024 and strengthen EPMB’s balance sheet, giving it further headroom and flexibility to fund its growth plans. As at end-June 2024, EPMB’s gearing stood at a healthy 0.56 times. It is expected to improve to 0.50 times after the completion of the private placement.

Proceeds from the private placement will be used to fund Phase 1 of PJVM’s Melaka Manufacturing Hub, which will house its new contract vehicle assembly operations. In 2024, PJVM signed vehicle assembly agreements with Great Wall Motor Sales Malaysia Sdn Bhd (GWM) and BAIC International Development Co, Ltd (BAIC). The Melaka Manufacturing Hub will have an initial assembly capacity of 6,000 cars per annum, operating one shift daily. While the fresh capital is positive, any rating improvement will also be dependent on its successful execution of its new vehicle assembly venture.

 

Analytical contacts
Thong Mun Wai
(603) 3385 2522
munwai@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my

 

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