Ayondo in convertible note deals worth up to S$9.9m; granted extensions to release Q2, Q3 results

CATALIST-LISTED Ayondo on Thursday entered into three convertible note agreements worth up to S$9.9 million. Two of the deals are with partner Golden Nugget Jinzhuan Limited and one is with Japanese investor Mamoru Taniya.

The convertible notes will be in registered form and not listed, the group said in a filing on the Singapore Exchange (SGX) before midnight.

Mr Taniya is the managing principal and co-chief executive officer of independent financial services firm Stormharbour Securities. He is a Golden Nugget shareholder who was introduced to Ayondo by Golden Nugget and has no shareholding interests in Ayondo.

The first convertible note agreement will see Golden Nugget subscribe for a convertible note of S$1.1 million in principal amount, which will be convertible into new shares at 0.7 Singapore cent apiece. This represents a discount of about 84.7 per cent over the volume-weighted average price of 4.59 cents for trades on the shares done on SGX on Jan 29, which is the full market day the shares were last traded prior to suspension.

The note will bear a simple interest of 8 per cent per annum, payable on the maturity date which falls one year from the date of issue on Oct 31. It is also transferable in whole or in part.

The principal amount of S$1.1 million was a loan Golden Nugget extended to Ayondo on June 30, and will be converted to the note following the agreement.

The second convertible note agreement will see Mr Taniya subscribe for a convertible note of S$675,000 in principal amount, also at a conversion price of 0.7 Singapore cent apiece. This note, which will not bear any interest and is not transferrable, will mature three years from the date of issue.

Similarly, the third convertible note agreement will see Golden Nugget subscribe for convertible notes of up to S$8.1 million in principal amount at a conversion price of 0.7 Singapore cent apiece. This will be paid in tranches, the first being a principal amount of S$675,000, and subsequent tranches in multiples of S$135,000.

The notes will bear a maximum simple interest rate of 12 per cent per annum from the date of issue of each relevant tranche up until they are repaid or converted. They will also mature three years from the date of issue of the respective tranches, or at an agreed date between both parties in writing. The notes are transferable in whole, but not in part.

Proceeds from the S$1.1 million note issue and the S$675,000 note issue will be used solely for working capital purposes, with the proceeds from the proposed S$1.1 million note issue having been fully applied for the group's general working capital.

Meanwhile, for the up to S$8.1 million notes issue, 39.5 per cent of the proceeds will be used for general working capital purposes; 30 per cent will go into the repayment of loans and outstanding payments owed by the group; 30 per cent will go into business expansion via investments, acquisitions and joint ventures; while 0.5 per cent will go into cost and expenses related to the notes issue.

Any disbursement from and the use of more than S$50,000 from the proceeds of the notes issue would require prior approval from Golden Nugget.

With the proceeds, the group said its directors are of the view that there is sufficient working capital available to meet its present requirements.

In another announcement on Thursday, Ayondo said an application to commence insolvency proceedings over the assets of Ayondo Holding AG (AHAG) has been filed. This was advised due to its "over-indebtedness" arising from the write-off of unit Ayondo GmbH in its accounts.

AHAG is Ayondo's 99.97 per cent-owned subsidiary, and an investment holding company with no operational business.

The company said: "The board is currently not able to determine the impact to the group rising from the AHAG insolvency but as far as the board is aware, there should not be any liabilities accrued to the company arising from the AHAG insolvency."

In a third announcement, Ayondo said that SGX has granted the company a three-month extension for the release of its second-quarter results to Nov 14 from Aug 14, and a one-month extension for the release of its third-quarter results to Dec 14 from Nov 14.

The reasons for seeking the waiver include not having a dedicated finance team to assist in the preparation of the results for release due to the departure of its chief financial officer in June 2019, and the exit of its entire finance team on the sale of Ayondo Markets Limited on June 5.

The company also experienced senior staff turnover with the departure of several C-suite staff, including its chief operating officer, chief talent officer, chief product officer, chief business officer and general counsel following the sale of Ayondo Markets Limited.

Its interim chief executive officer has also tendered his resignation in May 2019 and is serving notice. As the interim CEO is the sole remaining member of the group's management team, more time is required to collate financial information and preparate for the results for release.

"The company is currently in the process of identifying suitable qualified accountants to be hired as an outsourced or in-house personnel to perform the finance function of the group on a full-time or part-time basis," it added.