Techna-X has dropped a planned debt settlement that would have issued new shares to creditors. Instead, it will proceed with a private placement and a share capital reduction.
The Bursa Malaysia-listed firm stated in a filing that both parties agreed to end the RM1.17 million settlement plan announced in May. The proposed issuance of 77.71 million shares will not move forward.
Capital reduction and private placement move ahead
The remaining two proposals from the May announcement remain active: a RM38 million share capital reduction and a private placement of up to 30% of its issued shares. This reduction will erase RM34.8 million in accumulated losses, leaving retained earnings of RM2.71 million as of December 31, 2025.
At the corporate level, RM31 million in losses will be removed, resulting in retained earnings of RM6.5 million. The private placement aims to raise about RM1.76 million, based on an illustrative price of two sen per share. Of the funds, RM1.27 million will support working capital, while the rest covers expenses tied to the proposals.
Shares will be offered to outside investors, whose names will be revealed later. The company previously raised RM1.85 million through a separate private placement in July 2025, using those funds mainly for trade payable repayments and working capital.
After both moves are completed, Techna-X’s issued share capital will shrink to RM30.46 million from RM66.7 million. Total issued shares will rise from 293.9 million to 382.08 million. The gearing ratio is expected to improve to 0.38 times from 0.44 times at the end of 2025.
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Shareholders may view the shift as risky. While the private placement dilutes ownership, it avoids converting debt into equity—a move creditors might have favored. The capital reduction improves the balance sheet but fails to fix the cash flow problems behind the losses. Success depends on whether the new funds can stabilize operations long enough to reverse declining revenue.
Financial struggles continue
For the 18-month period ending December 31, 2025, Techna-X posted a wider loss after tax of RM29.26 million, compared with a RM19.20 million loss in the prior period. Revenue declined 13% to RM81.47 million from RM93.66 million.
The net loss from continuing operations reached RM42.28 million, a sharp drop from the RM4.78 million profit in the previous period. The decline stemmed from the sale of food and beverage subsidiaries, bad debts written off, impairment losses on receivables and intangible assets, and costs linked to its employee share option scheme (ESOS).
The company also abandoned plans to terminate its existing ESOS, noting it may reconsider later if conditions change. Both the capital reduction and private placement are expected to conclude by the fourth quarter of 2026.
TA Securities will serve as the principal adviser and placement agent for the private placement. Techna-X’s share price jumped 50% on Monday, closing at three sen, valuing the company at RM9 million.
These changes follow a broader effort to streamline operations and restore investor confidence. Similar restructuring moves have been seen in other firms facing financial pressure, where legal and corporate overhauls often accompany financial adjustments.
