Thursday 28 Mar 2024
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KUALA LUMPUR (May 6): Loss-making company XingHe Holdings Bhd is planning to issue redeemable convertible notes for a total value of RM120 million in order to raise funds for its diversification into prawn aquaculture operations.

Before that, the China-based company wants to consolidate every eight of its shares into one consolidated share to enhance its share capital structure and reduce the volatility of its shares’ trading price, the group announced in a stock exchange filing today.

For illustration purposes, the group’s current total issued 2.57 billion shares will be consolidated into 321.78 million consolidated shares, although the actual number of consolidated shares will be determined and announced by the board later.

“The proposed share consolidation and the proposed notes issue are inter-conditional upon each other,” XingHe said.

XingHe today entered into a conditional subscription agreement (CSA) with Advance Opportunities Fund for the proposed 1% equity-linked redeemable structured convertible notes due in 2022.

The notes, which will be issued in two tranches totalling RM60 million each, have a minimum conversion price of 20 sen.

Advance Opportunities Fund is controlled by Tan Choon Wee, the chief executive officer and director of Singapore-based Advance Capital Partners Asset Management Pvt Ltd. Under the CSA, the fund has agreed in principle to subscribe up to RM120 million of the notes.

Although the proposed notes issue will result in a proportionate dilution to shareholders’ holdings, XingHe does not expect a change in its major shareholder as the fund will not hold more than 15% interest in its total issued shares.

“The board, after due consideration of the various fund raising options, is of the view that the proposed notes issue is the most appropriate avenue of raising funds to address the group’s financial requirements,” XingHe said.

Proceeds from the proposed notes issue — besides to fund the acquisition of a prawn farm in Tawau for RM100 million, which it announced in January — will also be used for the working capital requirements of the farm, which would provide initial funding for the prawn aquaculture operations, the group added.

Pending approval from its shareholders and the relevant authorities, XingHe expects to complete the proposed share consolidation by the second quarter of this year, by which the first sub-trance of the Tranche 1 notes should also be available for issuance.

Shares in Xinghe closed unchanged at 2.5 sen today, leaving the group with an RM64.36 million market capitalisation.

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