Sino Hua-An to issue RM150m in redeemable convertible notes to fund business expansion

TheEdge Fri, Jun 14, 2019 08:30pm - 4 years View Original


KUALA LUMPUR (June 14): Sino Hua-An International Bhd is proposing to issue RM150 million worth of redeemable convertible medium-term notes in order to fund business expansion measures.

In a bourse filing, the group said it has entered into a conditional subscription agreement with Advance Opportunities Fund, in which Tan Choon Wee is the principal shareholder and sole director.

Each tranche will contain RM50 million in notes. However, for the first two tranches, there will be 10 subtranches worth RM5 million each — with the third tranche having 5 sub tranches worth RM10 million.  

The notes will mature within the first 36 months from the closing date of the first sub-tranche of the note’s first tranche.

Of the RM150 million expected to be raised, RM27 million will be utilised within three years, and is earmarked for business expansion and working capital purposes for subsidiary TouchPoint International Sdn Bhd. Another  subsidiary Wavetree PLT will receive RM25 million — to be utilised within three years.

Furthermore, Bistromalones (PJ) Sdn Bhd in Malaysia has been allocated RM40 million to fund business expansion and working capital.

An additional RM22 million will go towards the subsidiary’s business expansion and working capital in China — with both allocations to be satisfied within three years.

SHIB has earmarked RM26.2 million as working capital for its core business, which is to be utilised within three years as well.

Meanwhile, the group will use RM1.6 million, to be used within one month, to defray expenses such as professional fees.

Another RM8.2 million is portioned out for the redemption or implementation of the notes, which is to be utilised within three years.

The conversion price for the notes is 18 sen apiece — representing a discount of 15%, 12% and 10% respectively for Tranches 1,2 and 3.

For the first quarter ended March 31, 2019 (1QFY19) the group posted a net loss of RM4.19 million, from  net profit of RM5.55 million in the corresponding quarter last year. Quarterly revenue decreased to RM237.63 million from RM265.52 million.

The group said the quarterly loss and lower revenue was resultant of Chinese local government directives curbing heavy industries' activities during the quarter, as well as operating expenses incurred during the quarter.

Interestingly, the group’s trade receivables ballooned to RM106.78 million from RM19.28 million accounted for in 1QFY16.  

The counter closed 5.26% or a sen lower at 18 sen — with 6.45 million shares changing hands — giving it a market capitalisation of RM213.24 million.

 

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