Chip Eng Seng’s wholly-owned subsidiary CES Edutech has entered into a convertible note agreement with its associated company Amdon Consulting and the other shareholders of Amdon Consulting on Nov 2.
Under the terms of the convertible note, CES Edutech has agreed to provide Amdon Consulting of about $1.35 million.
The total principal amount, which includes the sum provided by the other shareholders of Amdon Consulting, comes up to some $1.64 million.
The total investment amount comprises an initial investment amount of some $0.94 million, of which about $0.65 million will be extended by CES Edutech.
A further investment amount of $0.70 million will be extended solely by the Chip Eng Seng subsidiary.
The maturity date of the convertible note stands at three years from the drawdown date of the initial investment amount.
The initial investment amount will bear interest at the rate of 5.2% per annum while the further investment amount will bear interest at the rate of 10.0% per annum.
Should there be an investment into Amdon Consulting which exceeds a stipulated amount, each Amdon noteholder has the right to convert all or part of its outstanding investment amount into ordinary shares of Amdon Consulting.
The conversion price per conversion share will be pegged at a 20% discount to the lowest price per share issued according to a qualifying equity financing or $11.41, whichever is lower.
According to Chip Eng Seng, Amdon Consulting’s online courses have established a presence in the US and China since its investment in November 2019.
“Amdon Consulting has near-term funding requirements to, amongst others, continue to develop its product offerings to gain a competitive edge in the educational technology sector,” says the company.
The terms of the convertible note were arrived at on a willing-buyer, willing-seller basis.
The investment amount will be funded from internal cash resources.
As at Nov 2, CES Edutech has a shareholding interest of about 38.0% in Amdon Consulting.
Shares in Chip Eng Seng closed 1 cent lower or 2.3% down at 42 cents on Nov 2.
