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Darco Water proposes S$6.5m private placement to 3 investors

DARCO Water Technologies has proposed to issue S$6.5 million worth of new shares to three private investors at S$0.35 apiece, the mainboard-listed firm said in a bourse filing on Monday.

The 18.7 million new shares will make up 16.62 per cent of Darco's enlarged share capital. 

The issue price of S$0.35 a share represents a premium of about 75 per cent to the volume-weighted average price of S$0.20 for trades done on Jan 8, the last full market day the shares were traded prior to Sunday, the day the subscription agreement was executed.

The issue price was arrived at following arm's length negotiations between the company and the subscribers.

The company has on Jan 12 entered into a placement agreement with the investors, whereby they have agreed to subscribe for the shares.

The subscribers are Zheng Ping, Liu Yang and Yunnan Sidu Investment Company, an investment vehicle of an individual Li Xin. 

The largest investor among the trio, Yunnan Sidu, will subscribe for S$5.2 million or 13.24 per cent of Darco's enlarged share capital. Mr Zheng will subscribe for S$700,000 or 1.78 per cent while Mr Liu will subscribe for S$630,000 or 1.6 per cent.

The three high net worth individuals were introduced to the company by Qarah Consultancy, which will receive an introducer fee of S$229,075 from Darco. 

Of the approximate S$6.3 million in net proceeds, Darco will use S$4.4 million for strategic investments, acquisitions, alliances, joint ventures or expansion. The remaining S$1.9 million will be used for working capital.

Darco had called for a trade halt on Jan 9, after market close. It requested to lift the halt on Monday afternoon, after the subscription agreement was announced.

Shares of Darco were up S$0.02 or 10 per cent to S$0.22 as at 3.48pm on Monday.