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China Haida proposes transfer to Catalist, launch of rights issue

THE board of China Haida is proposing to transfer the listing of the group from the mainboard of the Singapore Exchange to the Catalist board, following its struggle to meet the S$0.20 minimum trading price requirement of listing rules.

In relation with the transfer, the board is proposing a renounceable non-underwritten rights issue of up to 2.04 billion new ordinary shares at an issue price of 0.2 Singapore cent, on the basis of eight rights shares for every one existing ordinary share.

The issue price represents a discount of 71.4 per cent to the closing price of 0.7 Singapore cent per share on May 29, being the last market day on which the shares were traded immediately prior to the release of the announcement. It represents a discount of 21.7 per cent to the theoretical ex-rights price of 0.26 Singapore cent based on the last traded price.

China Haida wants to appoint CIMB Bank Berhad, Singapore Branch as the manager of the rights issue.

Due to regulatory and other constraints, some existing shareholders will not be participating in the proposed rights issue and will instead renounce their entitlement to the rights issue in favour of Sean Chong Soo Hoon, who does not currently own any shares in the company.

Shareholders of China Delta, which owns 29.2 per cent of China Haida, will transfer in favour of Mr Chong their entitlement of 595 million rights shares. Lai Shih-Wei, who owns 11.86 per cent of the company, will transfer his entitlement of 242 million rights shares while Guo Yun, who owns 100 per cent of Forbury Investments Ltd, which owns 5.67 per cent of the company, will transfer the entitlement of 116 million rights shares in favour of Mr Chong.

Mr Chong is a private investor and managing director of Anda Capital Solutions Pte Ltd, a business advisory and investment firm. He currently sits on the board of one mainboard-listed firm and one Catalist-listed firm.

China Haida will issue from 952 million to 2.04 billion rights shares, depending on whether other shareholders join Mr Chong in subscribing to the rights issue.

If none of the other shareholders subscribe and pay for any rights shares, Mr Chong will hold 78.9 per cent of the shares in the company, while other investors (excluding the three parties renouncing their entitlements to the rights shares) will hold 11.2 per cent. If the other shareholders fully subscribe for the rights issue, Mr Chong will hold 41.5 per cent of issued shares and other investors will hold 53.3 per cent.

In the first scenario, net proceeds are expected to be S$1.6 million. In the second scenario, net proceeds are expected to be S$3.8 million. The company intends to use the proceeds for general working capital purposes.

Both scenarios will result in Mr Chong acquiring 30 per cent or more of the voting rights of the company. China Haida will apply to the Securities Industry Council for a waiver that will relieve Mr Chong of the obligation to make a mandatory general offer for all the shares in the company.