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Swee Hong proposes S$4m placement as part of restructuring

DISTRESSED construction firm Swee Hong has entered an agreement to raise S$4 million in gross proceeds via a private placement to CIIC Group, a company solely owned by Swee Hong's executive director Tian Yuan. 

Proceeds from the placement will partly fund a scheme of arrangement Swee Hong plans to propose to creditors. The company had S$26.5 million in debt, against cash of S$331,000, on its books as at end-September.

In a Wednesday bourse filing, Swee Hong said that it plans to propose a scheme of arrangement comprising a write-off of specified debts, as well as payment to creditors of the balance amount in cash and shares. Further details of the scheme have yet to be finalised.

Swee Hong plans to use up to half of the placement proceeds to repay creditors under the scheme, and the remainder to repay advances and interim financing extended by CIIC from August 2019. 

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CIIC is a general contractor firm involved in building construction and upgrading, as well as investment and trading. It will hold an 88 per cent stake in the enlarged share capital of the company post-placement.

CIIC was introduced to Swee Hong by a business contact prior to the appointment of Mr Tian as an executive director in October last year, the company said in its filing. 

Swee Hong will be applying to the Singapore High Court to convene a creditors' meeting for the scheme of arrangement. Both the placement and scheme are expected to take place concurrently. Swee Hong will have to seek shareholder approval to issue shares for both corporate actions.

Trading in Swee Hong shares has been suspended since May 2019. The company is currently under court protection from creditors.