Economic Development Innovations Singapore will be raising its stake in marine engineering firm Mencast Holdings via $3 million worth of convertible bonds.
The bonds, to be issued for a three-year term, carries an interest of 4.75% per year.
Under terms of the investment, EDIS can convert the bond into shares at 14 cents each, adding up to 21.43 million shares. The conversion price is a 84% premium to Mencast's VWAP of 7.6 cents on April 15, before a trading halt was called.
Assuming full conversion, EDIS, which already owns 2.04% of Mencast shares, will see its stake increase to around 6.3% - assuming no other changes in the share base.
Just on April 14, EDIS partially cashed out from another SGX listed company Addvalue Technologies by selling 55 million shares for $5.17 million, or 9.4 cents each.
This latest transaction saw EDIS stake in Addvalue reduced from 6.45% to 4.95%. EDIS became a substantial shareholder of Addvalue in January, after converting bonds to shares worth $2,148,227 at 1.7 cents each. The sale means EDIS has pocketed a profit of $5.17 million.
EDIS, which is now channelling part of the proceeds from Addvalue to Mencast, sees the latter as a company undergoing a strategic transformation from traditional carbon-based marine and offshore activities toward a carbon-based to silicon-based future.
Mencast is doing so by tapping on capabilities of A*STAR and the National Additive Manufacturing Innovation Cluster, building propellors that will be more efficient, resulting in fuel savings.
“We are investing in Mencast at a clear inflection point," says Abel Ang, director of EDIS.
See also: Seatrium launches notes of $400 mil at fixed annual rate of 2.95%, presumably reduces cost of debt
"Beneath its legacy marine business sits a scalable engineering and technology platform that we believe can be repositioned into higher-value, digitally enabled manufacturing.
"This investment reflects EDIS’ strategy of backing technically strong businesses and working with visionary management to drive transformation, unlock value and build globally competitive platforms," says Ang.
