First Sponsor seeks to raise S$283.8 million in convertible perps issue

FIRST Sponsor Group is proposing a renounceable and non-underwritten rights issue of perpetual convertible capital securities to raise S$283.8 million.

The perps will be issued at S$1.08 each on the basis of one Series 3 convertible security for every five existing shares, the mainboard-listed company said on Friday (Aug 23).

Security holders may choose to convert the perps at an initial conversion price of S$1.08, subject to adjustment. The conversion price, however, should not be less than the nominal or par value of the share, said the company.

The initial conversion price of S$1.08 represents a discount of about 0.5 per cent to the volume-weighted average price of S$1.085 apiece for shares traded on Jul 23, the last full market day prior to this announcement.

The perps will have a distribution rate of 4.85 per cent per annum and will not have a fixed redemption date.

But the company may redeem all or some of the perps, as well as unpaid distribution and arrears of distribution, at any time on or after six months from the issue date.

BT in your inbox

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign Up

Sign Up

The Series 3 convertible securities are expected to be issued on Sep 30. DBS has been appointed as the manager of the rights issue.

After deducting professional fees and related expenses incurred by the rights issue, First Sponsor estimates the net proceeds to amount to about S$283 million.

First Sponsor said it plans to use net proceeds from the rights issue to fund expansion plans, and to strengthen its financial position and capital base.

SEE ALSO

First Sponsor H2 net profit plunges 96.8% to S$1.9 million on lower property handover volume in China

First Sponsor-led consortium buys Sydney property in A$24.7 million deal

First Sponsor H1 net profit climbs 12.4% to S$11.9 million

“The rights issue will also provide shareholders who are confident of the future prospects of the company with the opportunity to further participate in the equity of the company, while benefiting from the income derived from the Series 3 convertible securities,” it added.

The company said it intends to use 57.6 per cent of the net proceeds to finance its property development, property holding and/or property financing businesses. Additionally, up to 42.4 per cent of the net proceeds may also be used to fund the proposed acquisition of stakes in a project company.

First Sponsor noted that it is in ongoing talks with a co-investor, who holds a majority interest in a project company, to acquire the co-investor’s stake. The project company is developing a residential project in Dongguan, China.

It also noted that the net proceeds may also be used to repay the company’s borrowings, for investment in short-term money markets or debt instruments, as well as other purposes on a shorter-term basis that the directors may deem appropriate in First Sponsor’s interest.

First Sponsor operates in property development, property holding and property financing in China, Australia and Europe.

Shares of First Sponsor were trading down 1.9 per cent or S$0.02 at S$1.06 as at 2.12 pm on Friday.