SINGAPORE - Bearings and seals supplier Raffles United Holdings has received in-principle approval from the Singapore bourse for the listing of up to 234 million new shares under a one-for-one rights issue, and obtained an undertaking from its major shareholder to fully subscribe for her entitlement.
The rights issue, priced at $0.05 apiece, is expected to raise between $7.6 million and $11.6 million of net proceeds, after deducting $0.1 million for estimated professional fees and related expenses. Raffles United intends to use the majority of these proceeds to repay bank borrowings, with the remainder to finance working capital requirements.
Raffes United executive director Amanda Marie Teo Xian-Hui, who holds a direct and deemed interest of about 65.8 per cent in Raffles United, has given an irrevocable undertaking to fully subscribe for her entitlement of 153.9 million rights shares. That includes 153.4 million rights shares renounced in her favour by Raffles United Pte Ltd, an investment holding company in whose listco stake Ms Teo is deemed to be interested. If no other Raffles United shareholders subscribe for their rights shares, Ms Teo's stake in the company will increase to 79.4 per cent.
Ms Teo has provided confirmation from a financial institution that she has sufficient financial resources to fulfil the undertaking.
The rights issue represents a 39 per cent discount to the counter's closing price of $0.082 on Jan 8, the last trading day before the offering was first announced. The counter had not traded as at 1.01pm on Wednesday after the announcement. It last traded at $0.055 on Tuesday (March 19).
Raffles United has been on the Singapore Exchange's watch-list since Dec 5, 2018 for failing to maintain a six-month volume-weighted average trading price of $0.20 and a market capitalisation of at least $40 million. Mainboard-listed companies on the list have three years to resolve the issue, or may face delisting by the exchange.
In May 2018, the Commercial Affairs Deparment (CAD) began an investigation involving key personnel of Raffles United into potential breaches of the Securities and Futures Act. Ms Teo had provided a bond in the early stages of the investigation, but on Jan 3 her bond was released.
The company has said that its business and operations are not affected by the investigations and will "continue as normal".