CATALIST-LISTED Jubilee Industries Holdings plans to use proceeds from a proposed S$3 million fund-raising exercise for working capital, the company reiterated on Wednesday, after questions from the bourse operator.

But the electronics solutions provider could not state exactly how the net proceeds would be allocated across its mechanical business unit and electronics business unit operations, citing both the recency of the revenue recovery in these segments, as well as their recent diversification into new markets.

"It is therefore the case that the group would still need to monitor the trends and to thereafter assess the precise allocations that it should or has to make for each working capital needs for each segment," Jubilee said.

Still, it cited production ramp-ups; securing more inventory; or investments in new equipment or higher-margin products as some potential uses.

Jubilee expects that it would need a strong capital base to accomplish such activities "in order to remain competitive", it said in a bourse filing.

The Singapore Exchange (SGX) had asked Jubilee to elaborate on how it would use the proceeds, after its announcement on July 24 that it had agreed to place out new shares and warrants to seven individuals.

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While the SGX noted that the group had cash balances of S$7.7 million as at March 31, Jubilee said almost all of that has been earmarked for specific uses, such as payments for materials and machines, or to secure banking facilities. Just S$300,000 has been set aside for general working capital, it added.

Separately, the unrelated third party who introduced the seven placees had earlier been introduced to the company "through a common acquaintance", according to Jubilee's statement.

That's as the SGX asked how the company got to know introducer Lye Won Fui, who will be paid 3 per cent for each placement share - that is, 900,000 shares at S$45,000.

Jubilee called the introducer fee "in line with prevailing market rates and practices" for such a transaction, and added that it was on commercial terms reached at arm's length.

The proposed placement will be done at an issue price of five Singapore cents a share, or a discount of about 5.7 per cent to the volume-weighted average price on July 19.

Jubilee closed up by 0.1 cent, or 1.47 per cent, at 6.9 cents on Wednesday.