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Raffles Education cancels rights issue
RAFFLES Education on Tuesday said it will not proceed with its rights issue in light of "recent market conditions", and its prevailing share price being below the issue price of the proposed rights shares.
Shares in Raffles Education closed at 8.8 Singapore cents apiece on Tuesday, down 2.2 per cent or 0.2 Singapore cent.
The company had planned to raise 275.86 million new shares at an issue price of 10 Singapore cents, on the basis of two rights shares for every 10 existing shares.
On Dec 6 last year, the private education operator announced a renounceable, non-underwritten rights issue. This would raise S$27.44 million in net proceeds, meant primarily to repay loans owed to chairman and chief executive Chew Hua Seng.
Mr Chew had previously extended interest-free shareholder’s loans to the company for working capital purposes, with the outstanding amount at around S$16.37 million.
However on Dec 13, tycoon Oei Hong Leong sent a requisition letter to the board demanding an extraordinary general meeting be held where shareholders can vote to terminate the rights issue. He and Oei Hong Leong Art Museum hold over 10 per cent of the company's shares.
In response, Raffles Education said that it has obtained legal advice on the contents of Mr Oei’s letter, and was advised that the proposed resolution is invalid, and/or would be ineffective in light of the share issue mandate being approved by shareholders at the last annual general meeting.
In its latest filing to the Singapore bourse on Tuesday, the board added that it will reconsider other fundraising options, and will keep shareholders updated on any further developments.