Cacola proposes rights issue to raise up to S$31m

CACOLA Furniture International on Tuesday said that it is raising up to S$30.6 million through a rights issue.

It has proposed to issue as many as 1.6 billion new shares at an issue price of 1.9 Singapore cents for each rights share, on the basis of one rights share for every one existing ordinary share held by shareholders. Under a bonus issue, it will also issue up to 4.8 billion new shares on the basis of three bonus shares for every one rights share subscribed.

The issue price of 1.9 Singapore cents for each rights share, on its own, is more than three times the closing price of 0.6 Singapore cent per share as at April 29, 2016. If the bonus shares are taken into account, the effective issue price for each new share is 0.475 Singapore cent, representing a discount of approximately 21 per cent to the closing price.

The shares were up 33 per cent, or 0.2 Singapore cent, to 0.8 Singapore cent on Tuesday.

According to the company, the rights issue is meant for working capital and potential acquisition purposes. It added that the work would "enhance shareholders' value in the company".