Vashion plans 9-for-1 rights issue priced at 77% discount

VASHION Group is planning a 9-for-1 rights issue of up to 1.68 billion new shares to raise S$5.09 million in net proceeds.

At S$0.0032 for each rights share, the issue price represents a discount of about 77 per cent from the closing price of S$0.014 per share on June 30, 2016 - the last trading day prior to the announcement. The issue price is also about 25 per cent from the theoretical ex-rights price of about S$0.004 per share based on the closing price on Thursday.

Vashion said the rights issue is required to provide financial flexibility and cash buffer for the group's existing and future operations in the event it proceeds with plans to lease a commercial property in Jakarta Timur, Indonesia for S$2.91 million for a period of 20 years.

It added that the company had faced difficulties in borrowing from banks due to its past performance and "lifting" of suspension in November 2015.

Hence, its directors believed that the issue is "reasonably priced" given the constraints the company faced.

The planned issue is subject to shareholders' approval at an extraordinary general meeting to be convened in due course.