Oei calls for EGM on Raffles Edu rights issue
Exercise supposed to be covered by a share issue mandate approved by shareholders at AGM on Oct 29
Singapore
TYCOON Oei Hong Leong wants Raffles Education Corporation to hold a shareholders' meeting to vote on terminating the over-S$27 million rights issue meant primarily to repay loans owed to chairman and chief executive Chew Hua Seng.
According to a letter to Raffles Edu's board of directors dated Dec 13 and seen by The Business Times, Mr Oei also wants the company to confirm by Monday that no further action on the rights issue will be taken until the EGM is held.
As at press time, the company did not respond to BT's request to confirm receipt of Mr Oei's letter and to comment on the matter.
It is the latest tangle between Mr Chew and Mr Oei, who last year called for Mr Chew's removal from the company and has sued Mr Chew for some S$15 million. (see amendent note)
The billionaire and Oei Hong Leong Art Museum together hold more than 10 per cent stake in the private education provider.
Raffles Edu announced last Thursday a proposed rights issue of up to 275.86 million new shares shares at an issue price of S$0.10 for each rights share, on the basis of two rights shares for every 10 existing shares.
It expects to raise up to S$27.44 million in net proceeds. Over S$19 million or 70 per cent will be used to repay the group's debt.
This includes bank borrowings, as well as interest-free shareholder's loans that Mr Chew had extended to the company for working capital purposes.
The outstanding amount for Mr Chew's loans stands at S$16.37 million as at Dec 6. The rest of the net proceeds is supposed to go to general corporate and working capital purposes.
The company also said it would not seek specific approval from shareholders.
A share issue mandate approved at its annual general meeting (AGM) on Oct 29 allows directors to issue shares of not more than 50 per cent of the total number of issued shares as at that day.
The total issued share capital of the company as at Dec 6 stood at 1.38 billion.
The issue price represents a discount of about 27 per cent over the last transacted price of Raffles Education's shares on Dec 6.
Raffles Edu had earlier in the year raised S$44.38 million through a rights issue.
The company posted a net loss of some S$859,000 in the first quarter ending Sept 30, which narrowed from S$5.86 million a year ago.
Mr Oei and Oei Hong Leong Art Museum had withdrawn their requisition notice to ask Mr Chew to resign.
Mr Oei has also sued Mr Chew for S$15 million in alleged losses for breaching an agreement to find a buyer for Mr Oei's shares in the company.
Raffles Edu closed at S$0.114, down 0.1 Singapore cent or 0.87 per cent.
Amendment note:
A previous version of this article said that Oei Hong Leong sued Chew Hua Seng this year. Mr Oei has said that he began legal proceedings in 2017, and a pre-trial conference took place in June 2018.
