Shares of International Healthway Corp (IHC) surged 41.8 per cent yesterday after its new controlling shareholders said they would extend up to $55 million to the debt- laden company in convertible loans.
The stock opened at 8.1 cents and closed at 9.5 cents with 401 million shares changing hands, making it the day's most active counter.
Shares in the medical property developer last traded at 6.7 cents on Jan 23 before trading was halted and then suspended after a shareholder revolt put board control of IHC into new hands.
Late on Tuesday night, Oxley Holdings executives Ching Chiat Kwong and Eric Low, who have controlling stakes in IHC, said they would extend a $5 million convertible loan that IHC could draw upon immediately. Another $50 million would be granted by Oxley Holdings.
As part of the agreement, property developer Oxley will get a first right of refusal for IHC joint development projects. Both loan facilities bear a 6 per cent annual interest rate, and the loan amounts can be converted into shares at a discounted price of 6.102 cents. If both loans are fully converted, Oxley will emerge with a 32 per cent stake in IHC. Oxley shares rose 3.5 cents or 7 per cent to 53.5 cents yesterday.
The Oxley loan will be put to a shareholder vote. Permission from the Securities Industry Council is also needed to waive Mr Ching and Mr Low from having to make a mandatory general offer for IHC.
IHC is still not out of the woods regarding its debt obligations. While its total assets exceeded its total liabilities by $169.9 million at the end of last year, as of this month, total borrowings due and payable or capable of being rendered due and payable amounted to $23.067 million, "and this continues to increase monthly", noted FTI Consulting, which was appointed last week.
But FTI noted that the $55 million convertible loans give IHC the chance to pursue consensual restructuring with its creditors instead of going through a formal restructuring processes such as judicial management.
IHC also filed a police report on Monday against ousted former executive director Angeleca Lim, noting that 4.5GB of e-mails were deleted from her company account on the night she was voted out as an IHC director.
Ms Lim disputed IHC's assertion.
She told The Straits Times: "The company's e-mails are stored in the company's server and will remain intact for as long as the company does not delete them."
Correction note: This story has been edited to correct the day the police report was filed by IHC from Tuesday to Monday. We apologise for the error.