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Chaswood proposes to issue S$50m in 1% convertible notes

CHASWOOD Resources is proposing to issue S$50 million worth of 1 per cent convertible notes due 2022 to private subscribers in four tranches, it said in a bourse filing on Monday.

The notes will be issued in multiples of S$50,000, with the first three tranches making up S$10 million each, and the final tranche being S$20 million.

The notes will be convertible to shares from the time they are issued up until one week before the maturity date, which is 36 months after the closing date of the first tranche of notes.

For each conversion share, the issue price will be 80 per cent of the average volume-weighted average price per share on any three consecutive business days within the 45 business days before the conversion date, with a minimum conversion price of S$0.001.

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After deducting estimated fees and expenses, the net proceeds of S$46.8 million will be split 79 per cent for future expansions and investments, and 21 per cent for general working capital, said Chaswood.

The subscribers are proposed to be Advance Opportunities Fund (AOF) and Advance Opportunities Fund I (AOF I). Tan Choon Wee is the principal and sole director of AOF, while AOF I is managed by Zico Asset Management.

Mr Tan is also the former CEO and director of Catalist-listed Pine Capital's subsidiary Advance Capital Partners Asset Management, which used to manage AOF I.

An extraordinary general meeting will be convened to obtain shareholder approval for Chaswood's notes issuance.

Its board said it has explored various alternative sources of financing possibilities, but was unable to obtain any alternative financing for the group in view of its current financial position and performance.

"Thus, the board is of the view that the proposed notes issues is in the best interest of the company and its shareholders as it will improve the liquidity and financial position of the group to enable it to continue to operate as a going concern," it added.

Catalist-listed Chaswood's shares have been suspended from trading since June 18, 2018.

The firm is in the midst of a restructuring exercise, which includes working out a scheme of arrangement for creditors. It was granted, in October, an eight-week extension for a moratorium that expired on Oct 1.