KUALA LUMPUR (Oct 12): Alam Maritim Resources Bhd has proposed to issue three tranches of three-year redeemable convertible notes to raise up to RM160m to replenish its fleet of vessel and working capital.

The loss-making offshore oil and gas marine services provider said it has entered into a conditional subscription agreement with Advance Opportunities Fund I (AOF I), Advance Credit Fund SPC (ACF) and Advance Capital Partners Asset Management Pte Ltd (ACPAM) for the issuances.

AOF I and ACF are both Cayman Island-incorporated, while ACPAM was incorporated in Singapore. All three are controlled by Tan Choon Wee, who Alam Maritim said has over two decades of investment experience in the capital markets and held significant roles in major banking and stockbroking firms since 1991.

“He was an associate director of institutional sales in UOB Kay Hian Pte Ltd from January 1996 to April 2004 prior to joining RHB Securities Sdn Bhd as head of institutional sales and securities dealing from May 2004 to March 2005,” the group said in a filing with Bursa Malaysia.

Alam Maritim said the nominal value for the first and second tranche is RM50 million each, while for the third tranche it is RM60 million.

The notes will be privately placed to the subscribers, and bear interest from the respective dates on which they are issued and registered at the rate of 1% per annum, payable semi-annually in arrears on June 30 and Dec 31 in each year with the last payment of interest being made on the maturity date in 2021.

The notes are convertible into Alam Maritim shares. The conversion price for the first tranche is 80% of the average closing price on any three consecutive business days as selected by the noteholder during the 45 business days immediately preceding the relevant conversion date.

The rate for second and third tranches are 82% and 84%. But the conversion price should not be less than nine sen.

Alam Maritim said the number of conversion shares will be determined by dividing the aggregate principal amount of the notes held by the applicable conversion price.

The group plans to utilise up to RM50 million of the proceeds for maintenance and inspection works on its 16 existing vessels, while up to RM80 million will be used to acquire up to five Anchor Handling Tug Supply (AHTS) vessels with 8,000 brake horsepower, and convert two AHTS vessels from using only fuel oil system to using both fuel oil and liquefied natural gas dual-fuel system.

The group will also utilise up to RM17.6 million for working capital and the remaining RM12.4 million for expenses relating to the proposals.

Meanwhile, Alam Maritim also proposed to undertake a bonus issue of up to 462.23 million free warrants on the basis of one free warrant for every two existing shares, to reward shareholders.

The group said the exercise price will be determined by the board after taking into consideration the volume weighted average market price for the 45 market days immediately preceding the price-fixing date, with a premium to be determined later based on market-based principles.

Alam Maritim said the bonus issue of warrants and the proposed notes issue are inter-conditional.

“However, the proposed bonus issue of warrants will be implemented prior to the proposed notes issue,” it said.

Alam Maritim was traded unchanged at 12.5 sen today, giving it a market capitalisation of RM115.56 million.