HG Metal Manufacturing Announces S\$19.75 Million Rights Issue with Strong Support from Green Esteel
HG Metal Manufacturing Limited has launched a significant renounceable non-underwritten rights issue aimed at raising approximately S\$19.75 million. This strategic move is underpinned by the unwavering support of its controlling shareholder, Green Esteel Pte. Ltd., which currently holds a 29% stake in the company.
Key Highlights of the Rights Issue
- The rights issue will offer up to 74,254,237 new ordinary shares at S\$0.266 per share.
- Shareholders will receive 10 rights shares for every 27 existing shares held as of the record date.
- The issue price represents a discount of approximately 12.8% to the last traded price of S\$0.305 per share and a 9.7% discount to the theoretical ex-rights price (TERP) of S\$0.29.
- The net proceeds, after deducting expenses of about S\$400,000, will be approximately S\$19.35 million.
Use of Proceeds
The net proceeds from the rights issue will be allocated as follows:
- 25-30% for core business expansion, including enhancing operational efficiency and increasing production capacity.
- 35-40% for general working capital purposes.
- 30-40% for strategic investments and potential acquisitions of synergistic businesses.
The company plans to make periodic announcements on the utilisation of the net proceeds, ensuring transparency with shareholders.
Commitment from Green Esteel
Green Esteel has executed a deed of irrevocable undertaking, committing to:
- Maintain its 29% ownership as of the record date.
- Subscribe and pay for its pro-rata allotment of 21,533,330 rights shares, amounting to approximately S\$5.73 million.
- Subscribe and pay for any excess rights shares not taken up by other shareholders.
This commitment ensures that the rights issue will be fully subscribed, providing confidence in the fundraising effort.
Impact on Shareholding
The potential impact on the shareholding structure post-rights issue is significant. Green Esteel’s stake could increase to a maximum of 48.19% if no other shareholders subscribe to the rights shares, potentially triggering a mandatory general offer under the Singapore Code on Take-overs and Mergers.
Conversely, if all rights shares are subscribed by existing shareholders, Green Esteel’s stake will remain at 29%.
Eligibility and Procedure
The rights issue is open to all entitled shareholders, with provisional allotments based on their shareholdings as of the record date. Shareholders may accept, decline, renounce, or trade their provisional allotments during the rights trading period.
Foreign shareholders with registered addresses outside Singapore will not be eligible to participate in the rights issue. Their provisional allotments, if any, will be sold or otherwise dealt with as deemed appropriate by the company.
Working Capital and Financial Health
The directors have stated that the group’s current working capital is sufficient to meet its present requirements. However, they believe the rights issue will enhance the group’s financial flexibility, enabling it to seize growth opportunities and respond to industry trends.
Shareholders’ Responsibility
The directors have expressed their intention not to exercise their rights to allow other shareholders, especially Green Esteel, further opportunity to increase their stakes, aligning their interests more closely with the company’s long-term goals.
Conclusion
This rights issue represents a significant strategic move for HG Metal Manufacturing Limited, backed by strong support from Green Esteel. Shareholders are advised to consider the details carefully and consult their financial advisers to understand the implications fully.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Shareholders and potential investors should exercise caution and seek professional advice when making investment decisions.
