Malaysia-listed bunkering firm Straits Inter Logistics (Straits), formally known as Raya International, is planning a private fund raising move to raise up to approximately RM 13.80 million ($3.43 million).
Of the total sum, RM 10.62 million will be used for the purchase of raw materials while RM 3.118 million will be catered to working capital (including chartering expenses), according to a note by UOB Kay Hian Securities to Bursa Malaysia.
The bunkering and oil trading segment of Straits posted profit of RM 1.08 million in FY2016; the earnings was offset by losses of RM 0.93 million in other segments resulting in net profit of RM 0.05 million during FY2016.
In FY2017, Straits recorded total revenue of RM 82.86 million for its oil trading and bunkering services segment resulting in overall group net profit of RM 1.80 million.
However, the group has continued to record negative cash flows from operating activities position of approximately RM 5.69 million and RM 15.31 million for FY 2016 and FY2017 respectively mainly due to due to the timing differences between payment collection and securing of new bunkering contracts.
Straits is currently operating two bunkering vessels, namely Straits 1 and Sturgeon, and is currently exploring to charter two additional new vessels; the operation to charter the ships will require additional funding of RM 7.5 million for the purchase of 4 million litres of marine gas oil (MGO) to fully load the ships for a usage period of approximately one month.
“Premised on the above and in view that the group has just turned around to profitability position, the group intends to increase its purchases of raw materials such as marine gas oil, with the anticipation of higher demand of its bunkering services,’ explains UOB Kay Hian Securities.
“Therefore, the gross proceeds from the Proposed Private Placement was raised in the anticipation to meet the funding requirements of the current and potential collaborations so as to ensure that the group has sufficient capital requirement for its business operations to charter for new vessels by reducing the time in exploring funds should the financial needs arise.”
Published: 3 January, 2018
