Third-Eye View on Magma Group Recent Fund Raising Exercise

Asset-rich Magma Group Berhad (KLSE: 7243) had just made an announcement on getting green light on their fund raising exercise, amounting to a total of RM100.0 million to enhance their balance sheet.

As of now, Magma Group manages a few well established hotels, including Impiana KLCC, Impiana Ipoh, Impiana Senai and WOLO Kuala Lumpur.

So, why the need to raise funds?

Well, the fund raising exercise done (or soon to be done) by Magma Group is kind of special, which includes the issuance of Redeemable Convertible Notes (RCN) to raise the said RM100.0 million.

This RCN is sort of like an invisible army of troops. This is an instrument that allows Magma Group to have the funds ready anytime to enhance their cash flow, thus solidifying their current balance sheet.

Now, with a stronger balance sheet and expectation of up to 27.3 million international arrivals of Malaysia, which could boost the hospitality industry, Magma Group is stronger than ever in terms of their foundation.

I think it is quite safe to say that Magma Group is far, far away from any risks of triggering PN17.

All in all, Magma Group’s fund raising exercise is all beneficial to shareholders, and I don’t see any reasons why shareholders would reject it in the upcoming General Meeting, as the fundamentals of the company are much stronger with the RCN.

That is all for me. What do you think of Magma Group’s fund raising exercise?