As lending conditions tighten while the stock market stays depressed, waste management firm Metech International looks set to become the first listed company here to issue bonds on a crowdfunding platform.
Metech is seeking to raise $2 million by selling unrated junk bonds with a two-year tenure and 8 per cent coupon rate, to be paid out quarterly each year, it said on Tuesday. Half the principal will be repaid after the first year but the firm can repay the full sum then if it wants, without incurring a penalty. Late payments will incur a 12 per cent interest rate.
Metech chairman Simon Eng will pledge his equity stake in the company to an appointed trustee as security under the loan agreement. Mr Eng is the largest shareholder in Metech with a 11.6 per cent stake, according to the company website.
Crowdfunding platform FundedHere, which got its Capital Markets Services licence from the Monetary Authority of Singapore (MAS) in March, has been in discussions with Metech and other listed companies to launch the first crowdfunded listed company bond issue for some time. FundedHere charges a fee of 1.5 per cent per annum of the loan amount for arranging the bond issue by inviting accredited investors to subscribe.
Mr Eng could not be reached for comment yesterday, but he had said in July: "In the lacklustre market today, smaller listed companies will likely find FundedHere's proposed fund-raising option to be very attractive. I believe a coupon rate of 9 per cent, paid on a quarterly basis, will meet the interests of both investors and listed companies."
Metech intends to channel the $2 million raised into its supply chain management business.
The Metech bond issue will be open to accredited investors only, which means that the company need not register a prospectus for the issue. Asked what other rules are in place to protect investors, the MAS said: "MAS will admit only platform operators that are assessed to be fit and proper. Securities-based crowdfunding operators are expected to deal fairly with investors. Where a licensed intermediary is found to have breached MAS' rules, supervisory measures will be taken, ranging from enhanced audits to revocation of licence."