TrickleStar Launches Rights Issue with 39.5% Discount to Boost Financial Flexibility

TrickleStar Limited, a Singapore-based company, has announced plans to undertake a renounceable non-underwritten rights issue at an issue price of S\$0.015 per share. This represents a significant 39.5% discount to the volume-weighted average price of S\$0.0248 per share and a 42.3% discount to the closing price of S\$0.0260 per share on December 9, 2024. The initiative is set to provide existing shareholders with an opportunity to purchase additional shares at a discounted rate while bolstering the company’s financial position.

Key Details of the Rights Issue

The rights issue will be offered on a 4-for-5 basis, meaning shareholders will be entitled to purchase four new shares for every five existing shares held as of the record date (to be announced later). Fractional entitlements will be disregarded. The proposed rights issue aims to issue up to 67,426,073 new shares, representing approximately 80% of the company’s existing share capital and 44.4% of the enlarged share capital post-completion.

Strategic Rationale

The Board has emphasized that the rights issue is a proactive step to strengthen the company’s financial flexibility. While the Group’s current working capital is deemed sufficient, the proceeds from this initiative will enhance liquidity, support strategic growth initiatives, and provide additional resources for future opportunities. The Board believes this move will allow the company to seize business opportunities swiftly and contribute to improved financial performance.

Use of Proceeds

In the maximum scenario, the company expects to raise approximately S\$0.9 million in net proceeds, after deducting expenses of roughly S\$0.1 million. Notably, the entire amount will be allocated to general working capital requirements, which include corporate administrative expenses, operating costs, and other payables. Pending deployment, the funds may be deposited in banks, invested in short-term securities, or used for other short-term purposes.

Non-Underwritten Issue

TrickleStar has opted for a non-underwritten rights issue, citing cost savings as a primary factor. The Board confirmed that there is no minimum subscription amount required, and alternative funding options such as equity placements will be considered if necessary. Shareholders are advised that the issue will not be withdrawn once the ex-rights trading period commences, in compliance with SGX-ST rules.

Eligibility and Exclusions

Eligible shareholders include those with Singapore-registered addresses or who have provided a Singapore address at least three market days prior to the record date. However, foreign shareholders will not be entitled to participate due to regulatory restrictions. Shareholders can opt to accept, decline, renounce, or trade their rights during the “nil-paid” rights trading period on the SGX-ST.

Potential Impact on Share Price

The steep 39.5% discount to the market price and the issuance of a substantial portion of new shares could potentially create short-term volatility in TrickleStar’s share price. However, the initiative’s focus on strengthening the company’s financial foundation and providing growth opportunities may drive long-term shareholder value.

Risks and Caution

The completion of the rights issue is contingent on receiving necessary approvals from the SGX-ST and other regulatory bodies. Shareholders are advised to exercise caution in trading their shares, as there is no certainty that the issue will be fully subscribed or completed as planned.

Directors’ Statement

The Board collectively endorses the rights issue, citing its alignment with the company’s strategic objectives. Directors and substantial shareholders have not provided any undertakings to subscribe to their entitlements as of this announcement. The company will update shareholders if any substantial shareholder decides to participate.

Next Steps

Shareholders can expect further announcements regarding the record date and the lodgement of the Offer Information Statement. Eligible participants will receive instructions on how to access and apply for the rights electronically.

Disclaimer: This article is for informational purposes only and should not be construed as financial advice. Shareholders and potential investors are encouraged to consult their financial, legal, tax, or professional advisers before making any decisions. The company’s rights issue is subject to regulatory approvals and market conditions.