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Atlantic Navigation proposes 263m share subscription at 9.89 US cents apiece to raise US$26m

ATLANTIC Navigation on Monday said it has entered into a conditional share subscription agreement with Saeed Investment to issue about 263 million new shares priced at 9.89 US cents apiece to raise some US$26 million.

This subscription price represents a 10.5 per cent premium to the counter's volume-weighted average price of 12.2 US cents per share on June 13, 2018, being the last full market day preceding the agreement.

The subscription shares also represent about 100.89 per cent of the firm's existing share capital, and will represent about 50.22 per cent of its enlarged share capital should the proposed subscription be completed, Atlantic Navigation said.

The company added that the directors and shareholders of subscriber Saeed Investments are acquaintances of Atlantic Navigation's executive chairman and CEO Wong Siew Cheong, and that the subscription is "purely for investment purpose".

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Net proceeds from the transaction is expected to amount to US$25.8 million after deducting expenses.

Of the US$4.5 million deposit, US$3.4 million will be used to satisfy the company's payment obligations with regard to it accepting the delivery of two vessels as part of an agreement with a shipyard in China, and the deployment of these vessels. 

In addition, US$17.2 million will go towards full repayment of the outstanding amount accrued under a convertible loan agreement with SCF - a private equity fund based in Houston - within three business days following the completion of the proposed share subscription. The remainder from the net proceeds will be used for working capital purposes, Atlantic Navigation said.

For the share subscription to go through, SCF must first decline to take part in the deal. Under the convertible terms, SCF has a right of first refusal on the first US$4 million of any equity funding priced at less than 20 US cents per share before the earlier of Dec 15, 2018 and the loan's long-stop date.

Among other conditions, the transaction is also subjected to shareholder approval at an extraordinary meeting to be convened, as well as support from its lenders including Maybank and UAE Bank.

Atlantic Navigation is an investment holding company which provides ship repair, fabrication and other marine services. The company requested a lifting of its trading halt on Monday morning following this announcement.