SINGAPORE - Mainboard-listed infrastructure design and construction group Sapphire Corp has proposed to undertake a non-renounceable non-underwritten rights issue, on the basis of one rights share for every four existing shares in the company.
The issue price of $0.128 represents a discount of 11.11 per cent to the last traded price of $0.144 per share on Dec 24. The issue price also represents a discount of 9.09 per cent to the theoretical ex-rights price of $0.1408 per share.
Sapphire Corp, in a filing to the Singapore Exchange on Sunday (Dec 30), said it expects to receive net proceeds of between $2.46 million and $9.98 million from the rights issue.
Half of the proceeds will be used for investing in water and environmental management projects, including public-private partnership (PPP) projects such as the "Liveable River Bank" project in Chengdu, Sichuan Province. The other half will go towards general corporate purposes.
The rights issue will require shareholders' approval via an extraordinary general meeting (EGM). An EGM circular will be despatched to shareholders in due course.
As an indication of its support and commitment to the rights issue, Best Feast, a controlling shareholder of Sapphire Corp with a 27.96 per cent stake, has undertaken to subscribe for its pro rata entitlement to the rights shares, subject to a whitewash waiver being granted by the Securities Industry Council (SIC).
Sapphire Corp chief executive Wang Heng controls Best Feast. Depending on the take-up for the rights issue, Best Feast and Wang Heng could end up acquiring more than 30 per cent of Sapphire Corp. In such an event, they would be required to make a mandatory offer for the rest of Sapphire Corp under the Takeover Code, unless they get a waiver from the SIC and independent shareholders vote at the EGM to waive their rights to receive an offer.
An independent financial adviser will be appointed to advise the independent directors for the purposes of making a recommendation to independent shareholders in relation to the whitewash resolution at the EGM.
The rights issue is made on a non-renounceable basis, which means that provisional allotment of rights cannot be renounced in part of in whole in favour of a third party, or traded on the Singapore Exchange.
Separately, Sapphire Corp said on Sunday that its subsidiary, Ranken Railway Construction Group Co Ltd, has injected 25 million yuan ($5 million) in cash into the share capital of CDJ Environmental Management Co, representing a 25 per cent equity stake in the project company, and 25 per cent of its capital reserve. The project company was incorporated with a registered share capital of 50 million yuan.
The project company mixes the interests of Sapphire Corp and its consortium partners, which said in November that they would be involved in the investment and financing, design, build, operate and transfer works for the first phase of the Wuhou District "Liveable River Bank" project in Chengdu.
Shares of Sapphire Corp have been halted for trading since Dec 26. The company has requested that its trading halt be lifted from Monday.