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China Star Food raises S$4.3m from fully subscribed rights issue

CATALIST-LISTED China Star Food Group has raised net proceeds of about S$4.32 million from its fully subscribed rights issue of some 297 million new shares, the sweet potato snacks maker said on Tuesday night.

The net proceeds were derived after deducting estimated professionals’ fees and related expenses of about S$130,000 incurred in connection with the rights issue.

The company plans to use about 81 per cent or S$3.5 million of the net proceeds for a partial capital contribution to a Chinese unit, and 19 per cent or S$820,000 for working capital purposes, as stated in its offer information statement dated April 25, 2019.

The partial capital contribution will go to Fujian Zixin Biological Potato, a China-incorporated wholly-owned subsidiary of Singapore’s Zixin International, which is in turn wholly owned by China Star Food.

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The S$3.5 million will be used to make a partial payment for Fujian Zixin’s unpaid share capital which had 42 million yuan (S$8.25 million) outstanding as at April 18, representing about 53 per cent of Fujian Zixin’s total registered capital, according to the offer information statement.

The shares were issued at 1.5 Singapore cents apiece, which represents a discount of 38.46 per cent to the closing market price of 3.9 cents for trades done on the Singapore Exchange on Dec 10, 2018, the last trading day before the rights issue was first announced.

After the rights issue, the enlarged share capital of the company has doubled to 593.8 million shares.

As at the close of the rights issue on May 14, valid acceptances comprised 86.23 per cent of the shares available for subscription, while valid excess applications made up 43.03 per cent. These represented 129.26 per cent of the shares available under the rights issue.

The newly 296.9 million shares will be listed and quoted on the Catalist board on May 23, and trading of those shares will commence with effect from 9am on the same day.

China Star Food shares closed flat at two Singapore cents on Tuesday.