Viking Offshore shares tumble after proposing equity fundraising and new businesses

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Viking Offshore and Marine has proposed an equity fund raising, a name change, and a diversification into a new business Monday, which sent the company’s shares tumbling to close down 10.2 percent to S$0.088.

Rights issue

The company has proposed a renounceable non-underwritten rights cum warrants issue of up to 140.57 million new shares with up to 281.15 million warrants. The issue price of each rights share will be S$0.025, while the exercise price for each warrant will be S$0.04 for each new share, the company said in a filing to SGX. 

The rights issue will be on the basis of one rights share for every four existing shares, and two warrants for every rights share, the filing said. 

The issue price of the rights shares is a discount of around 74.5 percent to the closing price of S$0.098 on 24 March, while the warrant exercise price of S$0.04 is a discount of around 59.2 percent to the 24 March close, the filing said. The rights issue is expected to raise net proceeds of S$3.33 million, while the warrants issue could raise gross proceeds of up to S$11.25 million, the filing said.

Share placement

In addition, Viking Offshore said it plans a placement of up to 300 million new shares at S$0.05 each, subject to shareholder approval, to raise gross proceeds up to S$15 million. The company said it is in the process of appointing a placement agent to procure placees.

“The company believes that the rights cum warrants Issue and the proposed placement will strengthen the company’s balance sheet, and a stronger financial position will also allow the group to seize opportunities swiftly,” Viking Offshore said.

The proceeds of the equity fundraising will be earmarked for repaying existing loans, general working capital and to fund the proposed diversification, the filing said.

Diversification

The company has proposed diversifying the existing core business — offshore and marine, chartering service and corporate businesses — to include supply chain management and lifestyle retail businesses, the filing said.

Disposal of subsidiaries

The disposal of wholly owned subsidiaries Viking Airtech and Viking HVAC to Acapella Energy for S$50,000, was also proposed, the filing said. Acapella Energy is wholly held by Ng Yeau Chong, Viking Offshore’s executive director and CEO, who is also the sole director of Viking Airtech and Viking HVAC, the filing said. 

“The proposed disposal allows the group to exit from a loss-making business segment,” Viking Offshore said.

Viking Offshore noted the offshore and marine industry’s operations have remained challenging amid the pandemic situation. Because Viking Airtech and Viking HVAC facing difficulties trying to break even, the company viewed its options as only disposal, liquidation or to continue to provide support, draining company resources, the filing said. 

“The prospect of the proposed disposal without needing to incur major costs despite the nominal consideration was therefore appealing to the group. In addition, when the purchaser takes over the disposal group, it may be able to retain the majority of the manpower of the disposal group, thereby avoiding unnecessary retrenchment of staff and expenses to be incurred by the group,” Viking Offshore said.

Name change

In addition, Viking Offshore said it would seek to change its name to 9R Ltd.

Shareholders with an aggregate 85.43 percent stake in the company have executed deeds of undertaking to vote in favor of the proposals, Viking Offshore said. Those shareholders have agreed to take up their respective allotments of rights shares with warrants in the offering, the filing said.

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