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OFFSHORE marine solutions provider Vallianz Holdings has secured S$10 milllion through the issue of 10 million convertible preference shares.
These will be issued at US$1 each to United Orient Capital (UOC), an institutional investor fund which invests in mid-sized firms with mature operations, strong cash flow and good management teams.
The net proceeds of US$9.5 million will go towards fleet expansion and general working capital, Vallianz said in its announcement on Thursday morning. The existing bank facilities and working capital available to the group are sufficient to meet current requirements, it added.
UOC will receive a cumulative preferential dividend of 4 per cent for the first four years. This will be raised by 3 per cent each year every six months after. In lieu of the dividends, both can also mutually agree for Vallianz to issue more convertible preference shares at US$1 each to UOC.
If Vallianz does not pay the cumulative preferential dividends to UOC, or issue more convertible preference shares, the cumulative preferential dividend rate will be raised a further 2 per cent each year.
The conversion price for the preference share is US$0.0519, representing a premium of 16 per cent to the volume weighted average price of S$0.0604 on June 3. After conversion, UOC will have a 5.44 per cent stake in the enlarged share capital of Vallianz.
"We appreciate this investment commitment by UOC. Despite the uncertain business environment in the offshore oil and gas industry, we are continuing to expand our operations and remain positive of the group's long-term outlook. UOC's investment signals its confidence in Vallianz's business model, growth and industry prospects," said Vallianz CEO Ling Yong Wah.
UOC executive director Yeo Wee Yap said that UOC aims to help fast-growing companies with growth capital. "Vallianz has an experienced management team and a proven business model that is able to generate stable revenue returns," he said. "We believe Vallianz is well-placed to emerge stronger from the industry's current downturn."