Theme park operator Sim Leisure to issue subscription shares to raise around S$3.6M

Malaysia 10-ringgit noteMalaysia 10-ringgit note

Malaysian theme park operator Sim Leisure, which has struggled with the hit from the Covid-19 pandemic on visitors, said late Wednesday it entered a subscription agreement to issue new shares to raise around S$3.6 million.

The deal is with Tan Boon Seng, the non-independent non-executive director and a controlling shareholder, and with Desamal Capital, an associate of Tan, the company said in a filing to SGX.

Under the deal, Sim Leisure will issue 17.72 million new ordinary shares at S$0.205 each, marking a discount of around 5.9 percent to the volume-weighted average price of S$0.2178 a share on Wednesday, the filing said.

‘Limited financing options’

“The proceeds from the proposed subscription will increase the resources available to the company for its operational needs, among other expenses, and the financing of future strategic investments and/or acquisitions, and will allow the group to further strengthen its financial position and capital base,” Sim Leisure said in the filing. “Furthermore, in light of present market conditions, there are limited financing options available to the group.”

About 70 percent of the proceeds will be earmarked for funding potential growth or expansion initiatives, while the remainder would be used for general working capital, Sim Leisure said.

Last month, Sim Leisure reported its first half net loss widened to 6.95 million ringgit, from 2.54 million ringgit in the year-ago period as movement control orders (MCOs) to stem the spread of the Covid-19 virus shuttered operations, resulting in “significant disruption to its theme park operations.”

The subscription shares represent around 12 percent of the company’s existing share capital and around 10.7 percent of the enlarged share capital after the issuance, the filing said.

Before the offering, Desamal had owned 17.5 percent of Sim Leisure’s shares and Tan had held 18.18 percent, including his deemed interest in Desamal, the filing said. After the offering, and based on the enlarged share capital, Desamal will hold 25.74 percent of the company, while Tan will hold 26.95 percent, the filing said.

The subscription deal is contingent on shareholder approval, which will be sought at an extraordinary general meeting, the filing said.

Desamal is an investment holding company, which owns Malaysia’s largest Chinese restaurant food chain, including brands Dragon-I, Canton-I, Ho Min San and the Japanese franchise Yayoi, the filing said. It currently has around 40 restaurants in Peninsular Malaysia and Sabah state. In addition, it owns the Advance Tertiary College with 750 students across two campuses, located in Kuala Lumpur and Penang, the filing said.

Desamal also owns two fast-moving consumer goods (FMCG) brands, Bad Lab and Good Virtues, both offering personal grooming products, the filing said.

Desamal’s share capital is held by RHB Trustees as the bare trustee for SWY Trust, a family trust which has Tan and his siblings — Tan Boon Yao and Tan Boon Wy — as named beneficiaries, the filing said.