GSH Corporation plans to raise $78 million via a renounceable rights issue of convertible bonds in a bid to improve its liquidity and financial position by being less reliant on external funding.
Entitled shareholders subscribe four convertible bonds priced at $1 each for every 100 existing shares they hold.
The convertible bonds have a maturity date of three years from the issue date of the bonds, at a coupon rate of 5.20% per annum, payable on a semi-annual basis.
Holders of the convertible bonds will have the right to convert their convertible bonds into conversion shares priced at 17 cents, which is a discount of 9.6% off the June 30 closing price of 18.8 cents.
The convertible bonds will be used to repay shareholders’ loans including an amount of up to $32 million due to Sam Goi, GSH’s executive chairman.
Goi, who controls 59.82% of the company, will give an irrevocable undertaking to subscribe to his entire allotment of the bonds, and to also mop up any remaining excess of this issuance, and thereby, raising his stake in the company.
“This rights issue of convertible bonds, will allow the group to enhance its liquidity, enable it to navigate through the pandemic and put it in a strong financial position, for the recovery of regional
economies, as vaccination rates increase,” says Goi.
The company, which has property interests in Malaysia and China, plans to accelerate the launch of its first luxury residential and hotel development project in Bishan District, near Chongqing.
The hotel will be fully built by end of next year while the first phase of the residential component is targeted to commence in the third quarter of 2021 and complete by 2022, says Goi.
For the year ended Dec 31 2020, GSH reported losses of $14.2 million, from earnings of $14.8 million in the preceding FY2019.
