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Hubline's $6m share placement to help expand moves into dry bulk

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Hubline is keeping up the momentum to transform itself with yet another round of fund raising to raise more money to put itself on a better financial footing and for expansion into the bulk cargo segment.

The Sarawak-based shipping company elaborated on its expansion plans in a stock market announcement, detailing the rationale and use of proceeds from its MYR23m ($5.8m) private placement exercise which it announced in December.

The company had last year issued notes, raising MYR80m, and carried out a restructuring exercise to pare debts and finance the acquisition of new tugs and barges for its dry-bulk business.

“In addition to the funds raised from the RCN, the Board has decided to raise additional funds through the Proposed Private Placement to further reduce the Group’s existing borrowings, to expand its dry-bulk business and to settle amounts owing to creditors related to the Group’s container shipping business,” the group added.

The board said it was of the view that a private placement is currently the most appropriate means to raise funds expeditiously and cost effectively as compared to other fund-raising options. The move will enable the group to save on finance costs and further reduce its gearing level.

“Overall, the Proposed Private Placement is expected to strengthen the financial position of the Group as the Group seeks to pay down the bank borrowings in an orderly manner whilst at the same time pursue opportunities in the dry-bulk business, which the Board believes to be promising,” the group said.

Hubline said that although it turned in losses for the most recent full-year, it expects to return to profitability once the group “extinguishes all its obligations and commitments as a result of the group’s turnaround plan to exit from the container business and concentrate on its dry-bulk business”.