The share placement will address the low trading liquidity of Straits Trading’s shares.
The Straits Trading Company plans to place out $80.86 million worth of new shares, to improve liquidity and to raise funds for potential acquisitions, among other purposes.
The company will be placing a total of 26 million new shares at $3.11 each, which is a discount of around 8.9% off the volume weighted average price (VWAP) of $3.4126 for all trades conducted on Jan 13, just before a trading halt was called on the morning of Jan 14.
According to Straits Trading in its Jan 18 announcement, the placement, which represents some 6.39% of its total issued shares, is meant to address the low trading liquidity of the company's shares.
It will also increase its free float from 25.33% to 29.82%, increase resources and provide working capital available to pursue acquisitions, as well as other business opportunities. The move will also improve its cash flow.
The share placement is an important first step taken to address the low trading liquidity of Straits Trading shares on the SGX," says Eric Teng, CEO of Straits Developments.
"Our strategy was not only to optimise the number of shares in the market, but to enhance the free float and trading liquidity of Straits Trading with a possible increase in total market capitalisation," he adds.
“I am delighted with the investment community’s confidence in the potential of the Group. It is also an endorsement of management and staff to be able to continuously deliver value to our shareholders," says Chew Gek Khim, executive chairman of Straits Trading, who controls around three quarters of the company via various vehicles.
Specifically, Straits Trading intends to allocate $78.03 million for potential acquisitions and business opportunities, while the remaining $2.83 million will be used for the fees incurred by the private placement.
The shares will be offered to eligible institutional, accredited and other investors.
This share placement is handled by six placement agents: CLSA Singapore, DBS Bank, Maybank Securities, Phillip Securities, RHB Bank and UOB.
Straits Trading reported a profit after tax of $141.6 million for the 1HFY2021 ended June 30, 2021. Its total assets stood at $3.06 billion.
Shares in Straits Trading last closed at $3.40 on Jan 13.