FIRST Sponsor Group is proposing a renounceable and non-underwritten rights issue of perpetual convertible capital securities to raise S$283.8 million.
The perps will be issued at S$1.08 each on the basis of one Series 3 convertible security for every five existing shares, the mainboard-listed company said on Friday (Aug 23).
Should security holders choose, they may convert the perps at an initial conversion price of S$1.08, subject to adjustment. The conversion price, however, should not be less than the nominal or par value of the share, noted the company.
The initial conversion price of S$1.08 represents a discount of about 0.5 per cent to the volume weighted average price of S$1.085 apiece for shares traded on Jul 23, which was the last full market day prior to this announcement.
The perps will have a distribution rate of 4.85 per cent per annum and will not have a fixed redemption date.
But the company may redeem all or some of the perps, as well as unpaid distribution and arrears of distribution, at any time on or after six months from the issue date. In this situation, First Sponsor must not give an irrevocable notice of less than 45 or more than 60 days.
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The Series 3 convertible securities are expected to be issued on Sep 30. DBS has been appointed as the manager of the rights issue.
After deducting professional fees and related expenses incurred by the rights issue, First Sponsor estimates the net proceeds to amount to about S$283 million.
First Sponsor said it plans to use net proceeds from the rights issue to fund expansion plans, as well as strengthen its financial position and capital base.
“The rights issue will also provide shareholders who are confident of the future prospects of the company with the opportunity to further participate in the equity of the company, while benefiting from the income derived from the Series 3 convertible securities,” it added.
While the company has not identified specific opportunities, it said it may be used to finance its future property development projects and/or acquire properties.
It may also be used to repay the company’s borrowings and for investment in short-term money markets or debt instruments, added First Sponsor.
First Sponsor operates in property development, property holding and property financing in China, Europe and Australia.
Shares of First Sponsor were trading down 1.9 per cent or S$0.02 at S$1.06 as at 2.12 pm on Friday.
