Mary Chia Holdings proposes debt conversion at S$0.15 per conversion share

MARY Chia Holdings on Monday entered into a conditional debt capitalisation agreement (DCA) for the proposed debt conversion and issue of conversion shares of the aggregate debt into 25.5 million new ordinary shares, at a conversion price of S$0.15 per conversion share.

The parties involved in the agreement are Ho Yow Ping, Chia Ah Tow and JL Asia Resources (JLA).

In a bourse filing on Tuesday, the group said that as at March 1, it owed a total of S$3.83 million to the three creditors. Ms Ho, the executive chairman and chief executive of Mary Chia, had extended unsecured and non-interest bearing loans to the company for working capital purposes. Some S$1.46 million of the loan from Ms Ho remains outstanding and unpaid.

Meanwhile, Madam Chia, who is Ms Ho's mother and former executive chairman, similarly extended unsecured and non-interest bearing loans to the company for working capital purposes. Some S$2.12 million of the loan remains outstanding and unpaid.

JLA, which the group currently leases properties from for its operations, is owed S$244,000 in respect of rentals remaining outstanding and unpaid. JLA is a controlling shareholder of the company.

The conversion price of S$0.15 represents a 6.7 per cent discount of the weighted average price of Mary Chia's shares of S$0.1607 on March 1. The price was derived after taking into account prevailing market conditions and financial performance of the group, said the announcement.

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The conversion shares represent some 12.55 per cent of the existing share capital of the company, and about 11.15 per cent of the company's enlarged share capital after issuance and allotment of the conversion shares.

Mary Chia said that it had decided to enter the DCA in view of the group's poor financial performance and uncertainties brought about by the Covid-19 pandemic to its Singapore and Malaysia operations.

"The issue of conversion shares would be in the interest of the group, as it would alleviate the group from the pressure of its debt obligations. It will also strengthen the group's balance sheet and improve its debt-equity position," it said, adding that this would allow the group to "apply more of its cash flow towards its ongoing business operations or other opportunities instead of being committed towards debt servicing and repayment".

The proposed debt conversion will be subject to shareholders' approval at an extraordinary general meeting for the allotment and issue of the conversion shares.

Shares of Mary Chia closed at S$0.17 on Monday, prior to a trading halt that was called on Tuesday morning before the market opened.