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Nam Cheong raises S$22m from rights issue

OFFSHORE support firm Nam Cheong has raised S$22 million from its proposed one-for-one renounceable rights issue, it said on Wednesday, with the total valid acceptances for the rights issue at 75.04 per cent. 

The firm had expected to raise up to S$29 million, with the one-for-one renounceable rights issue at a price of S$0.014 for each new share. The issue price represented a 30 per cent discount to the counter's last traded share price of S$0.02 per share for trades done on July 20, 2017. That was the last trading day immediately before the mainboard-listed company requested for a trading suspension.

The total number of valid acceptances for Nam Cheong's rights issue translated to 1.57 billion right shares being subscribed by shareholders, on the basis on one right share for every one existing share held. With a renounceable rights issue, shareholders can also sell their rights on the open market. 

Its major shareholder and executive chairman Tiong Su Kouk had committed to subscribe fully to his share. With his 51.26 per cent stake in the company, Mr Tiong committed to subscribe for RM50 million (S$16.5 million) worth of rights shares.

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Most of the funds raised through the rights issue will go towards paring a portion of its debt, with the firm holding liabilities of more than RM2.12 billion as at June 30, 2018. The company's creditors will get cash from funds raised in the rights issue, and in return, write off a certain part of the debt owed from Nam Cheong. 

Nam Cheong's CEO Leong Seng Keat told The Business Times in early September that the liabilities will be reduced in the third quarter as well, once the conversion of over RM500 million of debt - mainly unsecured bank loans and notes - into equity takes effect.