YANGZIJIANG Shipbuilding BS6 : BS6 0%has entered into 2 separate bond agreements to issue S$25 million unsecured convertible bonds to investors EDB Investments (EDBI) and Alexandrian Worldwide Incorporated.

In a bourse filing on Friday (Mar 4), the shipbuilding and repairing company said the zero-coupon bonds will have a maturity of 12 months and may be redeemed at a premium of 12 per cent per annum.

The conversion price of the bonds is S$1.345 per share, based on the 50-day volume weighted average share price of Yangzijiang up to and including the date of signing the bonds agreement.

The conversion of bonds would result in the issue of a maximum of 37.2 million shares, representing about 0.95 per cent of the total number of current issued shares and about 0.94 per cent of the enlarged number of issued shares of the group.

Yangzijiang intends to use its holdings of 60.7 million treasury shares for conversion to prevent dilution of minority shareholders' interests.

The bonds will be mandatorily converted into ordinary shares of the group, subject to the approval from the relevant authorities, the Singapore Exchange, as well as the shareholders' approval for the proposed spin-off and listing of the group's investment segment, which was announced in November 2021.

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Without the approval for the spin-off and listing, the bond notes may be redeemed at a premium of 6 per cent per annum or converted to listed shares using the principal and redemption premium.

In a press release, the group said investors have agreed to moratorise their allotted shares in Yangzijiang's investment segment, Yangzijiang Financial Holdings, for 6 months after listing.

The group also plans for its largest shareholder, Ren Yuanlin, to moratorise his 21.8 per cent stake in the investment segment for 1 year after listing. It believes this will bring stability and confidence to the share price of Yangzijiang Financial Holdings after listing.

Ren Yuanlin, the honorary chairman of the group, said the investment segment will seek expansion into the fund and wealth management business in China and South-east Asia.  He believes that with the support of the Singapore Economic Development Board's investment arm, EDBI, there will be more partnerships in the future.

"The key management of Yangzijiang also continues to see deep value in both Yangzijiang entities post spin-off, having placed their trust through their investments in Alexandrian," he added.

Yangzijiang's executive chairman and chief executive Ren Letian also expressed his excitement to have EDBI on board as a strategic investor and partner.

"The shipbuilding industry will see strong demand for further developments in green vessel technology and we are committed to working with like-minded partners to seek breakthroughs in this sector," he said.

Shares of Yangzijiang Shipbuilding closed flat at S$1.50 on Thursday.