Hong Lai Huat Group has entered a warrant issuance deal to issue 80 million non-listed and transferable warrants to investment bank Soochow CSSD Capital Markets (Asia) (SCCM) for S$800, the company said in a filing to SGX Friday.
If the warrants are exercised in full, the estimated net proceeds would be around S$29.3 million, which would be used for general working capital purposes, the filing said.
The warrants, will be exercisable within two years of the date of issue, will carry the right to subscribe for one new ordinary share at S$0.30 for the first 20 million warrants, S$0.35 a share for the next 20 million warrants, S$0.40 a share for the following 20 million warrants, and S$0.45 a share for the last 20 million, Hong Lai Huat said.
The exercise prices market a premium of around 216 percent to 374 percent to the volume weighted average price of S$0.095 a share for trades on SGX Friday, the filing said. If the warrant exercise price is adjusted later, S$0.095 will represent the floor price, the filing said.
“The directors believe the issuance of the warrants is beneficial to the group in the long run as the exercise prices are at significant premia to the current market trading price of the shares and the funds from the exercise of the warrants will further strengthen the group’s cash
balance to be deployed for ongoing developments and activities in Cambodia,” Hong Lai Huat said.
If the warrants are exercised in full, the new shares would represent around 13.38 percent of the enlarged share capital, the filing said.
The warrant issuance is conditional upon SGX granting approval-in-principle for listing the new shares, the filing said.
Hong Lai Huat said it engaged SCCM to act as a corporate financial advisor to help the company engage with institutional investors.
SCCM’s ultimate parent is SooChow Securities, a Shanghai-listed financial services firm.
Hong Lai Huat Group is a property developer, with projects in Singapore and Cambodia. The group also diversified into the agricultural sector in Cambodia in 2008, and has developed farmland producing cassava and has a cassava starch production factory. Its projects include public and private residential projects in Singapore, as well as commercial and industrial projects.