Mainboard-listed Pavillon Holdings yesterday said it will pay the remaining RM29.9 million (S$9.8 million) for its Johor Bahru properties acquisition by issuing three-year convertible bonds at 5 per cent interest per annum.
Interest will be payable every six months, and the bonds will have a conversion price of 30.25 sen per share. This price represents an initial conversion premium of 108 per cent against Pavillon's closing price of 4.8 cents a share on Thursday.
According to Pavillon, the convertible bonds will be issued to Low Eng Heng, who is a majority shareholder of Hock Der Realty and Ascent Asia - the two companies which entered into sale and purchase agreements with Pavillon for the proposed acquisitions in Malaysia.
The group had previously mentioned that it would also issue 70 million new shares to partially fund the acquisition.
Following this placement, Pavillon would have 457.7 million shares in the company. If the convertibles are fully converted, the conversion shares will represent about 18 per cent of the firm's enlarged share capital.
"The conversion right attaching to any convertible bond may be exercised, at the option of the bond holder, at any time within three years from the date of issuance," Pavillon noted.
In September this year, Pavillon said that its subsidiary, Fengchi Real Estate, had entered into conditional purchase agreements to acquire a total of 107 lots and adjoining vacant land in City Plaza, Johor Bahru for RM52 million. Completion of these agreements have been extended to February next year instead of next month.
The company added that it will convene an extraordinary general meeting to obtain shareholders' approval to issue these convertible bonds, as well as 70 million new shares at 10 cents apiece, amounting to $7 million or about RM21.18 million, to serve as part payment of the purchase price.
Completion of the proposed acquisitions is subject to conditions precedent in the agreements being fulfilled, and that there is no certainty or assurance that these will be completed, Pavillon said.
The company has been placed on the Singapore Exchange's watch list since June 5 this year for failing to meet the minimum trading price criteria of maintaining a market cap of at least $40 million, and a share price of 20 cents.