Key Highlights of the Proposed Rights Issue

• Offer Size: Bromat Holdings plans to issue up to 129,468,852 new ordinary shares at S\$0.066 per share, representing a 12.0% discount to the last traded price of S\$0.075 and an 8.8% discount to the theoretical ex-rights price (TERP) of S\$0.072.
• Allotment Ratio: Shareholders will be entitled to subscribe for 42 Rights Shares for every 100 existing shares held.
• Gross Proceeds: The maximum subscription scenario is expected to raise approximately S\$8.54 million, while the minimum subscription scenario will bring in approximately S\$7.10 million.
• Net Proceeds: After deducting expenses, the maximum net proceeds will be S\$8.24 million, with S\$4.79 million in cash, while the minimum net proceeds will be S\$6.80 million, with S\$2.70 million in cash.
• Use of Funds: Proceeds will be allocated to strategic business expansion, repayment of loans, payment of fees and creditors, and general corporate purposes. Notably, approximately S\$3.45 million will be converted from existing loans into equity.

Shareholder Considerations and Potential Impact

Shareholders should note the following critical points that could influence share value:

• Significant Dilution: Under the minimum subscription scenario, the collective shareholding of independent shareholders will be diluted from 19.5% to 14.4%.
• Strategic Backing: Major shareholders, including Valiant Investment Limited, have committed to underwriting substantial portions of the rights issue, demonstrating confidence in the company’s long-term potential.
• Moratorium Adjustment: Gazelle Ventures Pte. Ltd. (GV), which holds 54.89% of the company’s shares, has applied for a variation of its SGX-ST-mandated moratorium to allow its holdings to fall below 51%, enabling the rights issue to proceed.
• Non-Underwritten Nature: The rights issue is not underwritten, which reduces costs but may introduce uncertainties regarding full subscription.

Strategic Rationale and Business Outlook

The Board has underscored the necessity of the rights issue to implement its strategic initiatives, including:

• The rebranding of its food and beverage business under the “Shang Society” brand.
• The expansion of its institutional catering business through the acquisition of Dining Haus Pte. Ltd.
• Exploration of overseas opportunities and other acquisition targets.

Given the competitive pressures in the F&B industry, including rising operational costs and the influx of new market entrants, the company’s leadership is optimistic about driving sustainable growth and enhancing profitability through these initiatives.

Price Sensitivity and Forward-Looking Statements

The proposed rights issue and associated developments are likely to be price-sensitive, as they signal a substantial shift in the company’s financial and operational strategy. Shareholders and potential investors should exercise caution when dealing in Bromat Holdings’ shares and consider the longer-term implications of the rights issue.

The company has also issued forward-looking statements, highlighting risks and uncertainties that could impact its performance. Factors such as economic conditions, geopolitical developments, and market dynamics may influence outcomes.

Eligibility and Conditions

The rights issue is open to shareholders with Singapore-registered addresses as of the Record Date. Foreign shareholders will not be eligible unless they update their addresses to Singapore before the cut-off date. The rights issue is subject to conditions, including SGX-ST’s approval and compliance with Catalist Rules.