Hot stock: Halcyon Agri jumps 18.2% after announcing perpetuals

SHARES of Halcyon Agri Corp recovered some of their losses on Monday, after the natural rubber supplier proposed to issue guaranteed perpetual securities in place of a rights issue.

The mainboard-listed counter climbed about 18.2 per cent or four Singapore cents to 26 cents within the first minute after the opening bell, according to Shareinvestor data.

It eased to trade at 23.5 cents as at 10.08am on Monday, up 1.5 cents or 6.8 per cent. About 4.7 million shares changed hands.

On Friday night, Halcyon Agri said it decided to issue perps as it was a "more optimal and equitable" funding option given the current market conditions.

The perps will raise greater net proceeds than the previously proposed rights issue, which would have brought in some US$125.4 million in net proceeds if fully subscribed.

In addition, Chinese state-owned enterprise Sinochem International Corp (SIC), which owns Halcyon Agri's major shareholder Sinochem International Overseas, plans to provide a corporate guarantee to support the issuance of up to US$200 million of perps.

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The guarantee - which is subject to SIC shareholders' approval - will make the perps more marketable with institutional investors, Halcyon Agri said. This will give more certainty on the amount of proceeds that can be raised from the perps, as compared to the rights issue, as the latter's issue price "may not be attractive to investors", it added.

Two months ago, the company proposed a renounceable non-underwritten one-for-two rights issue of up to 797.5 million new shares at 22 Singapore cents apiece. The issue price was at a 36.2 per cent discount to the last transacted price of 34.5 cents per share for trades done on June 19.

Since the rights issue was announced in late June, the stock's price had fallen about 20 per cent as at Friday.

"In light of the recent share price movements and in consideration of current market conditions, the company has been exploring various means of alternative equity fundraising options which are more suitable under the prevailing circumstances," said Halcyon Agri on Friday.