Raffles Education is trying to raise gross proceeds of more than $44 million via convertible bonds to pay off debt and use the remainder for working capital.
First, it plans to raise nearly $26.2 million via a renounceable underwritten rights issue of a convertible bonds priced at 85 cents each.
The rights issue bonds are to be offered to entitled shareholders on the basis of 19 rights issue bonds for each 1,000 shares they hold.
The convertible bonds will mature in five years and will pay a coupon of 6% a year. The initial conversion price has been set at 6.5 cents.
Chew Hua Seng, the company’s chairman, CEO and controlling shareholder, now holds 462.9 million shares, equivalent to 33.58% of the company. He will take up his full allotment and “may at his discretion” take up additional rights issue bonds.
The company is also raising $17.9 million from UOB Kay Hian via a placement of convertible bonds. The initial conversion price has been set at 6.5 cents.
Raffles Education says the fundraising is decided upon having considered the overall terms of the convertible bonds amid current market volatility.
“The proceeds raised will be timely to supplement the group’s internally generated cash flow to meet its on-going financial obligations.
“The rights issue will also provide shareholders with an opportunity to further participate in the equity of the company through the possible conversion of the rights issue bonds as the prospects of the group and its share price improves in line with the recovery of its business post pandemic,” adds Raffle Education.
The company’s shares closed on June 7 at 6.1 cents, up 1.67% for the day down 12.86% year to date.