SINGAPORE - Offshore support vessel owner and operator, Vallianz Holdings, has proposed to consolidate every 30 existing ordinary shares in the company into one ordinary share.
As at July 4, 2018, the firm has an issued share capital of $491.5 million consisting of about 16.6 billion shares. The proposed share consolidation will result in approximately 552 million consolidated shares.
According to Vallianz, the theoretical trading price of each consolidated share will be 30 cents, based on the counter's trading price of one cent on July 3.
It added in an exchange filing on Wednesday (July 4), that the proposed share consolidation will have no impact on the dollar value of the issued and paid-up share capital of the company.
Each consolidated share will rank pari passu in all respects with each other, and be traded in board lots of 100 consolidated shares, Vallianz said.
The board believes that the proposed share consolidation will help to reduce short-term share price volatility, as well as fluctuations in its market cap, and offset the effects of short-term share price speculation.
"As share trading may involve certain minimum fixed expenses (such as minimum brokerage fees), trading in lowly-priced shares may translate to higher transaction costs, relative to the trading price, for each board lot of shares. In addition, lowly-priced shares may be more prone to speculation and market manipulation, and therefore are generally more volatile as compared to higher-priced shares," Vallianz said.
The company is also of the view that the proposed share consolidation may generate greater market interest, and increase the attractiveness of the firm and its shares.
Said Vallianz: "It is expected that, all other things being equal, the theoretical trading price and net tangible assets (NTA) of each consolidated share following the decrease in the number of shares in issue would be higher than the current trading price and NTA of each existing share."
"In addition, the proposed share consolidation may facilitate corporate actions, and also increase market interest and activity in the shares from investors, including institutional investors, thus providing a more diverse shareholder base."
Among other things, the proposed share consolidation is subject to shareholders' approval at its 2018 annual general meeting (AGM), as well as approval from the Singapore Exchange for the listing and quotation of the consolidated shares.
Separately on Wednesday, Vallianz announced it has received notice from SGX for the listing of 196.7 million settlement shares on the Catalist board, at an issue price of 1.6 Singapore cents apiece, to be issued to its trade creditors.
The price represents a 60 per cent premium above the counter's volume weighted average price of one Singapore cent on June 27, being the market day when the agreements were entered into.
The settlement shares represent about 1.19 per cent of the firm's issued share capital of 16.5 billion shares, and 1.18 per cent of the firm's enlarged share capital as at June 27.
Since the company's last AGM in July 2017, Vallianz's issued share capital has also increased from 4.5 billion shares to 16.5 billion shares as at June 27 2018, in part due to the exercise of warrants, and a rights cum warrants issue.
The subscription of the settlement shares by the trade creditors will fully offset against aggregate trade payables of $3.1 million, and the rationale of the subscription is to settle trade payables whilst conserving cash reserves, Vallianz said.
It added that the trade creditors are trade vendors of the group, with the trade payables having been incurred in respect of purchases made in the ordinary course of business.