Raffles Education said on Friday that two shareholders who together hold more than 10 percent of the company are seeking an extraordinary general meeting in a move to stop the company’s planned rights issue, which is intended to repay loans from the CEO.
Oei Hong Leong and Oei Hong Leong Art Museum sent a letter stating they hold more than 10 percent of Raffles Education’s issued shares and that they required the meeting be convened under section 176 of the Companies Act of Singapore, it said in a filing to SGX after the market close on Friday.
Under section 176, holders of at least 10 percent of a company’s shares can requisition the company to call an extraordinary general meeting within two months as long as they have stated the object of the meeting and signed the requisition.
According to SGX data, Oei Hong Leong holds 9.76 percent of Raffles Education, while Oei Hong Leong Art Museum holds 3.14 percent.
Raffles Education said the two shareholders were seeking an individual vote on the following resolution: “That the proposed rights issue of up to 275,858,734 new ordinary shares in the company with the rights issue proceeds to settle the company’s Chairman and Chief Executive Officer, Mr. Chew Hua Seng’s loans to the company as announced by the company on the 6 December 2018 be terminated immediately.”
The company said it was taking legal advice on the letter’s contents.
On 6 December, Raffles Education said it was proposing the rights issue at S$0.10 for each rights share, on the basis of two rights shares for every existing 10 ordinary shares held by entitled shareholders.
The rights issue was expected to raise from S$27.42 million to S$27.44 million in net proceeds, if fully subscribed, it said.
The rights price was a discount of around 27 percent over the last transacted price of the shares on 6 December, that filing said.
Some of the rights issue proceeds were earmarked to partially repay debt, including the CHS Loans, which were cash advances in the form of interest-free shareholder’s loans to the company for working capital purposes, with the amount outstanding around S$16.37 million, the 6 December filing said. Under the rights issue plan, the CHS loans would be reduced by an amount up to S$9.25 million, it said.