SINGAPORE - Supermarket chain operator Sheng Siong is placing out $80.4 million worth of new shares to fund its expansion plans here.

The company said early on Thursday that it will offer 120 million shares by way of a placement at an issue price of 67 cents per share.

The price of the placement shares represents a discount of about 5.37 per cent to the volume weighted average price of 70.8 cents on Wednesday, which was the last trading day before the placement agreement was signed.

The placement shares represent about 8.67 per cent of the company's current issued share capital of 1,383,537,000 shares.

They amount to some 7.98 per cent of the enlarged issued share capital of 1,503,537,000 shares after the issuance and allotment of the new shares.

Proceeds of the placement will increase the firm's capital base and will be used to fund its future expansion plans in Singapore, Sheng Siong said.

Of the gross proceeds of $80.4 million, between 98 and 99 per cent of it will be used to finance the expansion, while the rest of the gross proceeds will be used to pay the fees incurred from the placement exercise

Such expansion plans include the acquisition of properties for new retail outlets in areas which the are deemed to present viable business prospects.

The money will give it a sizeable war-chest to explore potential new markets in Singapore, in line with its strategy of selectively acquiring retail space in strategic locations.

Sheng Siong said this strategy will complement its historical strategy of leasing new retail outlets, helping to position itself more favourably for growth.

The company announced in August that it entered into a non-binding deal for a proposed joint venture with Kunming Luchen Group to operate supermarkets in China

It also announced in June that it has been granted an option to buy a three-storey HDB commercial property at Block 506, Tampines Central 1, to set up shop in the mature estate.