PETALING JAYA: Hengyuan Refining Company Bhd is moving forward with plans to raise up to RM300 million through a renounceable rights issue, which involves offering up to 300 million new shares, along with up to 150 million accompanying warrants.
The rights issue will be made on the basis of one new rights share for every one existing Hengyuan share held by shareholders. Additionally, for every two rights shares subscribed, shareholders will be entitled to receive one free warrant.
The issue price and the entitlement date for this rights issue and warrant offering will be announced at a later date.
This move forms part of Hengyuan’s strategic efforts to strengthen its financial position and support future growth initiatives.
Hengyuan chief financial officer Yeo Bee Hwan said that over the past five years, the company has invested more than RM2.2 billion in capital expenditure to enhance production capabilities and expand into higher-value products such as sustainable aviation fuel and Euro 5 gasoil.
She said these initiatives have supported revenue growth and stronger customer demand.
“The rights issue will provide the group with the working capital to secure additional feedstock and support operational efficiency, while also strengthening our equity base and financial flexibility,“ she said in a statement.
Malaysia Hengyuan International Ltd (MHIL), Hengyuan’s major shareholder holding 51.02% share, has undertaken to subscribe for its full entitlement of rights shares. This commitment secures the minimum fundraising of RM155 million under the exercise.
The majority of the funds raised from the rights issue will be used to purchase additional crude oil feedstock, which is the primary raw material in the refining and production of petroleum products.
By securing a steady supply of feedstock, the company aims to enhance production efficiency, reduce the cost per barrel, and improve its overall competitiveness in the market.
“Supported by our major shareholder, MHIL, and the progress of our strategic initiatives, Hengyuan is targeting a return to profitability by 2026. Subject to achieving profitability, the board will also consider the resumption of dividends in the future, as set out in the company’s 2024 annual report,“ Yeo said.
On operational performance, Hengyuan in FY24 recorded revenue of RM17.2 billion, representing a 12% year-on-year increase, driven by higher demand for refined products.
The company remains the primary supplier of Shell refined products in Peninsular Malaysia, while broadening its customer portfolio to include Petronas, Petron and Five.
Currently, about 90% of Hengyuan’s refined products are sold domestically, with the remainder exported within Southeast Asia.