Leader Environmental Tech terminates proposed placement, mulls rights issue instead

LEADER Environmental Technologies (LET) on Monday announced that it will be terminating its proposed placement due to the prevailing market price of its shares traded on the local bourse "being at a substantial discount" to the placement price of S$0.17, as well as the conditions precedent of the placement pending fulfilment, among other factors.

Instead, the group is now contemplating a possible rights issue of up to 663.5 million new shares at an issue price of S$0.10 for each rights share, raising total gross proceeds of S$66.3 million if fully subscribed.

LET had at first proposed in January to place up to 352.9 million new shares at S$0.17 apiece for gross proceeds of about S$60 million.

At the time, the placement price had represented a discount of about 9.2 per cent to the volume-weighted average price (VWAP) of S$0.187 per share for trades done on the Singapore Exchange (SGX) on Jan 29.

However, LET's last traded price on April 23 was S$0.145, which represents a VWAP discount of 14.7 per cent to the placement issue price of S$0.17.

In a bourse filing late on Monday, the board of LET said that the company, along with Stirling Coleman Capital as the placement agent, as well as the placees, had "mutually agreed to terminate the proposed placement".

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The possible new rights issue will be on the basis of one rights share for every two existing shares held by entitled shareholders, disregarding fractional entitlements. A record date has yet to be determined.

The possible rights issue price of S$0.10 represents a discount of about 31 per cent to the last traded price of S$0.145 per share on April 23, and a 23.1 per cent discount to the theoretical ex-rights price of S$0.130, being the theoretical market price of each share, assuming the completion of the possible rights issue calculated based on the closing price on April 23.

Additionally, chairman and chief executive of the company Lin Yucheng, who holds some 198 million or 14.9 per cent of shares in the company, will provide an irrevocable undertaking to subscribe and pay in full, his entitlements of the rights shares in the possible rights issue.

LET said the proceeds will enable the group, notwithstanding the termination of the placement, "to have resources to invest in environmental-related projects, including undertaking business investments and acquisitions of environment-related businesses, make payments for tender deposits, performance bonds and other project related expenses… (and) to invest in synergistic companies or companies with environmental technologies which are complementary to the group's business, as well as raise general working capital".

However, it added: "Shareholders and potential investors should note that there is no certainty that the possible rights issue will proceed."

The company intends to announce the possible rights issue, together with its detailed terms, at LET's annual general meeting on April 30, subject to shareholders' approval of a resolution on granting directors the authority to allot and issue new shares.

Shares of LET last closed at S$0.145 on April 23. This was before a trading halt that was called on Monday, which has since been lifted.