SINGAPORE - Mainboard-listed China Jinjiang Environment Holding Company (CJE) will be issuing 214 million new shares to Harvest Environmental Investment Fund SP to raise some S$107 million.
The issue price of S$0.50 represents a 5.78 per cent discount to the volume-weighted average price of S$0.5307 on Apr 20, being the full market day for trades done on shares of the company preceding the subscription agreement.
The subscription shares represent 17.5 per cent of the issued shares of the company, and 14.9 per cent of the firm's enlarged share capital.
The subscriber, Harvest Environmental Investment Fund SP is a discretionary managed fund managed by Harvest Global Capital Investments Cayman, a wholly owned subsidiary of Harvest Global Capital Investments.
According to CJE, the subscriber's investment mandate focuses on "long-term capital appreciation, and its objective is to invest in different investment opportunities in the environmental sector in China".
Harvest Environmental Investment Fund SP is not related to any directors or substantial shareholders of CJE.
Estimated net proceeds from the proposed subscription after deducting expenses amount to about S$106.9 million. The company intends to utilise all of the proceeds for the technical upgrading of eight WTE (waste-to-energy) facilities in China. This will expand the waste treatment capacity of the group by about 5,000 tonnes per day, while also reducing emission levels and the proportion of coal used at the group's WTE facilities, CJE said.
The proposed subscription will also improve the firm's gearing and enhance its borrowing capacity.
In addition, the group will be able to diversify its financial and capital resources, and better manage the capital expenditure requirements of expanding its pipeline of WTE projects, CJE said in a filing with the Singapore bourse on Monday.
Said CJE's non-executive, non-independent chairman, Wang Yuanluo: "Moving forward, with Harvest Global Capital Investments as a long-term investor, the group will be able to better capture new business development opportunities, consolidate its leading industry position domestically, and maximise value for its shareholders." Among other things, the deal is conditional upon in-principle approval being granted by the SGX-ST (Singapore Exchange Securities Trading) for the listing and quotation of the subscription shares, and approval from Harvest Environmental Investment Fund SP's investment committee.
Assuming that the proposed subscription was completed on Jan 1, 2017, earnings per share of the company will be reduced from 49.35 fen (10 Singapore cents) to 41.97 fen after the subscription, while net asset value per share will fall from 388.66 fen to 366.79 fen.