SINGAPORE – Mary Chia Holdings has proposed issuing 100 million new shares at one cent each to four investors, which would allow it to raise $1 million to strengthen its financial position and fund overseas expansion plans.
The move, announced on Oct 6 after the market closed, will bring in new investors but siginificantly dilute the shareholdings of Mary Chia’s existing investors.
The subscription price represents a discount of about 27 per cent to the volume-weighted average price of 1.37 cents between Sept 30 and Oct 5, the day the company called a trading halt.
It is also about 35.1 per cent and 36.3 per cent below the volume-weighted average prices of its shares over the preceding one-month and three-month periods respectively.
The beauty and wellness group said the proposed share issue is necessary to strengthen the group’s capital base and liquidity and give it greater financial flexibility to meet its operating and business development requirements.
The company’s net current liabilities stood at about $12.58 million on March 31, while net liabilities were about $11.82 million. Its cash and bank balances stood at about $310,000.
Net current liabilities measure the shortfall between assets and obligations due within a year, while net liabilities mean the group’s total liabilities exceeded its total assets.
For the financial year ended March 31, the group recorded a net loss of about $2.64 million and net operating cash outflows of approximately $2.97 million.
Its independent auditors had also said they could not obtain enough reliable evidence to form an opinion on whether the financial statements were accurate.
Mary Chia expects to receive net proceeds of about $946,570 from the proposed share issue, after estimated expenses of about $53,430.
Of the amount raised, $750,000, or 79.2 per cent, will be used for working capital, including manpower costs, professional fees, compliance and continuing listing expenses, and administrative and head-office costs, the company said.
The remaining $196,570, or 20.8 per cent, will fund the expansion of its operations in China and Thailand, including the establishment of offices and other operating expenses.
The new shares will be subscribed for by company founder Mary Chia Ah Tow and three other businesswomen, Ng Yen Ying, Lin Yan and Maggie Lim Min Er.
Chia and Ng will each subscribe for 20 million shares for $200,000, while Lin and Lim will each invest $300,000 for 30 million shares.
The company said Ng, Lin and Lim were identified through business networking and are independent of the company, its directors, chief executive, controlling shareholders and their associates.
They are investing for their own accounts and are not acting in concert with other parties, according to the announcement.
Upon completion, Mary Chia’s issued share capital will increase from about 333.84 million shares to 433.84 million shares. The 100 million subscription shares represent about 29.95% of its existing share capital and 23.05% of the enlarged share base.
Chia, who is 76, currently owns about 4.23% of the company, and will hold about 7.86% after the transaction, making her a substantial shareholder of the company.
She is the mother of Ho Yeow Ping, Mary Chia’s executive chairman, chief executive, director and controlling shareholder. Ho’s husband Lee Boon Leng is a controlling shareholder of the company.
According to its announcement, Chia had approached the company on Sept 21 to express her interest in subscribing for new shares to demonstrate her support for the group.
However, as she is an associate and immediate family member of a director and controlling shareholder, Chia’s subscription requires specific shareholder approval.
Ng will own about 4.61% of the enlarged company, while Lin and Lim will each hold about 6.91%.
After the share issue, the family behind Mary Chia – comprising Ho, Lee, Chia and Suki Sushi, an investment vehicle owned by Ho – will own a combined stake of about 61.5% in the company, compared with 73.93% currently.
Mary Chia said it will seek confirmation from the Securities Industry Council that the allotment of shares to Chia will not require her or the family concert-party group to make a mandatory offer for the company.
The transaction is also subject to shareholder approval at an extraordinary general meeting.
