Straits Trading shares tumble after announcing private placement to raise around S$81M

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UPDATE and CORRECTION: Straits Trading issued a statement Tuesday evening, which indicated different placement agents than its original statement. UOB Kay Hian and Maybank Kim Eng Securities were removed from the list, and Maybank Securities was added.

The Straits Trading Co. has launched a private placement of 26 million new shares at S$3.11 each to raise around S$80.86 million, the resources-to-property conglomerate said in a filing to SGX Tuesday. 

Shares of Straits Trading tumbled 5.29 percent to S$3.22 by 2:41 p.m. SGT.

The placement price is a discount of around 8.9 percent to the volume weighted average price (VWAP) of S$3.4126 a share for trades on 13 January, the filing said. 

The new shares, representing around 6.39 percent of Straits Trading’s issued shares, will boost the stock’s free float to 29.82 percent from 25.33 percent currently, the filing said.

“The share placement is an important first step taken to address the low trading liquidity of Straits Trading shares on the SGX. Our strategy was not only to optimise the number of shares in the market, but to enhance the free float and trading liquidity of Straits Trading with a possible increase in total market capitalisation,” Eric Teng, CEO of Straits Developments, said in the statement.

The proceeds are earmarked for acquisitions and to fund growth in the real estate, resources and hospitality businesses, and for general working capital and administrative purposes, the filing said.

The placement shares will be offered to eligible institutional, accredited and other investors, Straits Trading said.

The joint placement agents for the deal are CLSA Singapore, DBS Bank, United Overseas Bank, Philip Securities, Maybank Securities and RHB Bank, the filing said. 

Straits Trading, founded in 1887, is a conglomerate with businesses ranging from resources, to property, to hospitality, with stakes in the world’s third-largest tin producer Malaysia Smelting, ARA Asset Management and Far East Hospitality Holdings, as well as having a diversified property portfolio. 

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