JB Foods Limited, a Singapore-based cocoa ingredients producer, has announced a renounceable non-underwritten rights issue to raise up to S\$19.49 million. The initiative aims to bolster the company’s working capital and fund strategic growth initiatives. This move is expected to have implications for shareholders and potentially impact the company’s share price.

Key Details of the Rights Issue

• Issue Price: The rights shares will be issued at S\$0.45 per share, representing a discount of approximately 9.1% to the last traded price of S\$0.495 on December 30, 2024, and 8.0% to the theoretical ex-rights price (TERP) of S\$0.489.
• Allotment Ratio: Entitled shareholders will receive one (1) rights share for every seven (7) existing ordinary shares held as of the record date, with fractional entitlements disregarded.
• Total Shares Issued: Up to 43,314,280 new shares will be issued, increasing the company’s issued share capital from 303,199,966 shares to 346,514,246 shares.
• Ranking of Rights Shares: The new rights shares will rank pari passu with existing shares but will not be entitled to dividends or distributions declared before the allotment date.
• Non-Underwritten Nature: The rights issue will not be underwritten, as key shareholders have provided irrevocable undertakings to subscribe for their entitlements.

Shareholder Commitments

Key shareholders, including JB Cocoa Group Sdn. Bhd. (JBC) and Tee Yih Jia Food Manufacturing Pte. Ltd. (TYJ), have pledged their support for the rights issue:

• The JBC Concert Party Group, holding 49.46% of shares, has committed to subscribing for their pro rata entitlements and potentially applying for excess shares, subject to regulatory conditions.
• The TYJ Concert Party Group, holding 24.73% of shares, has also committed to subscribing for their entitlements and applying for excess shares if necessary.

These commitments eliminate the need for underwriting and reduce associated costs, benefiting the company financially.

Purpose and Use of Proceeds

The company intends to use the approximately S\$19.38 million in net proceeds for the following:

• Working capital requirements, including corporate administrative expenses and operating costs.
• Repayment of facilities, loans, or other obligations.
• Supporting strategic growth initiatives and enhancing liquidity for future operations.

JB Foods asserts that the rights issue will strengthen its financial position, enabling the company to execute its business strategies effectively while providing shareholders an opportunity to maintain their equity stake and participate in future growth.

Potential Price-Sensitive Factors

Key factors that could influence JB Foods’ share price include:

• The discounted issue price of S\$0.45, which may impact market perceptions.
• The substantial rights issue size, representing approximately 14.29% of the existing share capital.
• Commitments from major shareholders to support the rights issue, signaling confidence in the company’s long-term prospects.
• Potential dilution for shareholders who do not fully subscribe to their entitlements.

Additionally, regulatory approval from the Singapore Exchange (SGX-ST) and the Securities Industry Council (SIC) is required, and any delays or rejections could affect share price performance.

Eligibility and Trading of Rights

Only shareholders with registered addresses in Singapore or those who have provided local addresses at least three (3) market days before the record date will be eligible to participate. Entitled shareholders can renounce or trade their rights on the SGX-ST during the prescribed trading period.

Foreign shareholders may have their rights sold “nil-paid,” subject to the company’s discretion and market conditions, with net proceeds distributed as per the offer information statement.

Director’s Statement and Cautionary Note

The board believes the rights issue is in the company’s best interest, citing its potential to strengthen the financial position, enhance flexibility, and support strategic initiatives. Shareholders are advised to exercise caution when trading in the company’s shares and consult professional advisors if in doubt.