CFA Society Singapore
SINGAPORE (Mar 25): First Sponsor Group is undertaking a rights issue of securities with detachable warrants as well as a bonus issue to raise up to $399.3 million for expansion.
This comes after the property developer aborted plans for a rights issue involving warrants exercisable into perpetual convertible capital securities which are, in turn, convertible into ordinary shares.
In its Monday filing, First Sponsor plans to issue up to 113.7 million free detachable warrants and 79.6 million bonus warrants.
Under the rights issue, shareholders are entitled to one Series 2 convertible security for every seven existing shares held.
Each Series 2 convertible security carries a 3.98% distribution rate, and may be converted into common shares at an initial conversion price of $1.30 each; as well as one free detachable warrant, which carries the right to buy one share at $1.30.
Under the bonus issue, shareholders will get one warrant for every 10 shares held, also with a $1.30 strike price.
The initial $1.30 conversion price for the convertibles represents a 2.36% premium over the stock’s Monday close of $1.27, being the last trading day prior to this announcement.
After deducting professional fees and related expenses of about $1 million, estimated net proceeds from the issue of the Series 2 convertible securities under the rights issue are expected to be about $146.9 million.
First Sponsor plans to use about 78.5% of the proceeds to fund property development projects or acquire properties held for income, 10% for general working capital purposes, and the remainder to redeem all outstanding Series 1 convertible securities.
As for the bonus warrants, the estimated gross proceeds from the exercise of the warrants is about $251.4 million, assuming that the maximum number of warrants are issued at the exercise price.
Counting Hong Leong Group Singapore and Tai Tak Estates among its shareholders, First Sponsor plans to use the gross proceeds for property development, or its property financing business and for working capital as well.
The proposed exercises are subjected to shareholders approval at an annual general meeting to be convened on April 24.
United Overseas Bank is the appointed manager of the rights issue.
As at 3.0-pm on Tuesday, shares in First Sponsor were trading unchanged at $1.27.