Pavillon to issue 3-year, 5% convertible bonds to pay for Johor Baru properties

Singapore

MAINBOARD-LISTED Pavillon Holdings on Friday said it will pay the remaining RM29.9 million (S$9.84 million) for its Johor Baru properties acquisition by issuing three-year convertible bonds, at 5 per cent interest per annum.

Interest will be payable every six months, and the bonds will have a conversion price of RM0.3025 per share. This price represents an initial conversion premium of 108 per cent against Pavillon's closing price of S$0.048 a share on Dec 22.

According to Pavillon, the convertible bonds will be issued to Low Eng Heng, who is a majority shareholder of Hock Der Realty Sdn Bhd and Ascent Asia Sdn Bhd - the two companies which entered into sale and purchase agreements with Pavillon for the proposed acquisitions.

The group previously mentioned that it would also issue 70 million new shares to partially fund the acquisition. Assuming that shareholders approve this share placement, the 70 million new shares will be undertaken by Lim Tiong Soon, who will have a controlling interest in the company. Mr Lim was nominated by Hock Der Realty to subscribe to these shares as an independent party.

Following this placement, Pavillon would have 457,748,700 shares in the company. If the convertibles are fully converted, the conversion shares will represent about 18 per cent of the firm's enlarged share capital.

"The conversion right attaching to any convertible bond may be exercised, at the option of the bondholder, at any time within three years from the date of issuance," Pavillon said.

In September this year, Pavillon said its subsidiary, Fengchi Real Estate Sdn Bhd, had entered into conditional purchase agreements to acquire a total of 107 lots and adjoining vacant land in City Plaza, Johor Baru for RM52 million. Completion of these agreements has been extended to February 2018 instead of January.

The company added that it will convene an extraordinary general meeting to obtain shareholders' approval to issue these convertible bonds, as well as the 70 million new shares at 10 Singapore cents apiece, amounting to S$7 million, to serve as part payment of the purchase price.

Completion of the acquisitions is subject to conditions precedent in the agreements being fulfilled, and there is no certainty that these will be completed, Pavillon said.

The company has been placed on the Singapore Exchange's watch list since June 5 this year for failing to meet the minimum trading price criteria of maintaining a market cap of at least S$40 million, and a share price of 20 Singapore cents.