RH Petrogas proposes capitalisation of shareholders' loans into 90m new shares

MAINBOARD-LISTED RH Petrogas announced on Wednesday that it has entered into a conditional capitalisation deed for the company to allot and issue 90 million new shares at S$0.172 apiece to a company, Surreyville.

In a bourse filing, it said this would be in full repayment and discharge of the sum of S$15.48 million, being a significant portion of the interest-free shareholder loans owed by the company to Surreyville.

RH Petrogas' controlling shareholders are Tiong Hiew King and Tiong Ik King, who together with their family members, hold an aggregate of 63.9 per cent shareholding interest in the company. Surreyville is an entity within the Tiong family group that holds around 28.6 per cent direct shareholding interest in RH Petrogas.

RH Petrogas said: "The proposed capitalisation is in line with the company's intentions to capitalise shareholders' loans extended by various entities owned and controlled by the Tiong family group to the group into equity."

As of Wednesday, RH Petrogas said the total outstanding amount of shareholder loans owed by the company to Surreyville was S$17.7 million.

The capitalisation price of S$0.172 represents a premium of around 0.5 per cent to the S$0.1711 volume weighted average price (VWAP) of the ordinary shares of the company for trades done on Tuesday. It is also a premium of around 12.4 per cent to the price of S$0.1530 - the VWAP of the shares over the one month period before Wednesday.

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The 90 million in new shares will constitute around 10.8 per cent of the total enlarged issued share capital of the company, following the completion of the proposed capitalisation.

It will result in Surreyville holding around 36.4 per cent of the total enlarged issued share capital of the company; the Tiong family group's shareholding interests would rise to around 67.8 per cent.

RH Petrogas said the proposed capitalisation would reduce the debt burden of the group without adversely affecting its operating cash flow.

"Further, this will strengthen the group's financial position and capital base, thus enhancing its flexibility to raise debt and to capitalise on potential growth opportunities," it added.

Completion of the proposed capitalisation is subject to a number of conditions, including obtaining shareholders' approval for the proposed capitalisation, and for a whitewash waiver from the Securities Industry Council.

RH Petrogas shares rose 2.3 per cent on Wednesday to close at S$0.176 before the announcement.