SINGAPORE - Hong Leong-linked property developer First Sponsor Group has withdrawn its initial application for a rights issue involving warrants exercisable into convertible securities, and is now proposing instead to undertake a rights issue involving warrants directly exercisable into shares, along with a bonus issue to raise up to $399.3 million.
Under the rights issue, for every seven existing common shares held, shareholders are entitled to one Series 2 convertible security, which carries a 3.98 per cent distribution rate and may be converted into common shares at an initial conversion price of $1.30 per common share; as well as one free detachable warrant, which carries the right to buy one common share at $1.30 per share.
The company is also proposing a bonus issue, under which shareholders will get one warrant for every 10 existing common shares held, also with a $1.30 strike price.
The initial conversion price for the convertibles, at $1.30 represents a 2.36 per cent premium over the counter's Monday (March 25) close of $1.27, being the last trading day prior to this announcement. As at 9.30am on Tuesday, no trades were done for the day.
First Sponsor is looking to issue up to 113.7 million free detachable warrants and a bonus issue of up to 79.6 million warrants.
The proposed exercises are subjected to shareholders approval at an annual general meeting to be convened on April 24.
The rights issue books closure date and the bonus issue books closure date will fall on the same date, which will be announced at an appropriate time, First Sponsor said.
In a regulatory filing on Tuesday (March 26), the company said it is undertaking the rights issue to provide it with the "financial flexibility to fund its expansion plans".
After deducting professional fees and related expenses of about $1 million, estimated net proceeds from the issue of the Series 2 convertible securities under the rights issue are expected to be about $146.9 million.
First Sponsor intends to use about 78.5 per cent of the proceeds to fund property development projects and/or the acquisition of properties (including hotels) held for income, 10 per cent for general working capital purposes and the remainder to redeem all its outstanding Series 1 convertible securities.
Separately, as the warrants are issued free, there will be no proceeds raised initially, the company said. Assuming that the maximum number of warrants are issued at the exercise price, the estimated gross proceeds from the exercise of the warrants are expected to be about $251.4 million. The company plans to use the gross proceeds for property development, or its property financing business and for working capital as well.
First Sponsor has appointed United Overseas Bank as manager of the rights issue.