Shares in Viking Offshore & Marine plunged 10.204% to 8.8 cents at market open on March 28 after the company made several announcements including its name change and proposed diversification of its existing core business. The company has also announced its intention to raise funds via a rights cum warrants issue and proposed placement on the same day.
Renounceable non-underwritten rights cum warrants issue
Viking Offshore & Marine, on the morning of March 28, has proposed a renounceable non-underwritten rights cum warrants issue of up to 140.57 million new ordinary shares in the company at 2.5 cents apiece.
The shares will come with up to 281.15 million free detachable and transferable warrants at an exercise price of 4 cents for each new share.
The issue price represents a discount of approximately 74.5% to the closing price of 9.8 cents per share on the SGX-ST on March 24, whereas the exercise price represents a discount of 59.2% to the last traded price.
Under the issue, entitled shareholders will receive one rights share for every four existing shares held in the capital and two warrants per rights share subscribed.
See also: Viking Offshore and Marine to raise $880,000 through private placement
Should all the rights shares be subscribed and all warrants exercised, the company will raise $3.33 million and $11.25 million respectively.
According to the company, the rights cum warrants issue and proposed placement is to raise funds to strengthen its financial position and expand its capital base.
“In view of the current financial circumstances, the company believes that the rights cum warrants issue and proposed placement will strengthen the company's balance sheet, and a stronger financial position will also allow the group to seize opportunities swiftly,” reads the statement released on SGX on March 28.
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Should all the rights shares be fully subscribed, Viking Offshore & Marine will use $1.95 million of the $3.33 million raised to repay its existing loans.
The remaining $1.38 million will go towards the company’s general working capital requirements.
The proceeds from the warrants will also go towards the company’s general working capital requirements.
There has been no undertaking from the company’s substantial shareholders to take up their respective rights shares with warrants.
Proposed placement
In addition, the company intends to place up to 300 million new shares at an issue price of 5 cents, raising gross proceeds of up to $15 million.
After the deduction of fees, the company will net some $14.4 million. Of the sum, $10.0 million will fund the company’s proposed business diversification, where it will add supply chain management and lifestyle retail businesses to its current core businesses of offshore and marine, as well as its chartering service and corporate businesses.
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The remaining $4.4 million will go towards the company’s general working requirements.
The proposed placement will take place after the rights cum warrants issue.
UOB Kay Hian Private Limited has been appointed as manager for the rights cum warrants issue.
Proposed diversification
On the same day, Viking Offshore & Marine has proposed to diversify its core businesses to include supply chain management and lifestyle retail business.
The proposed diversification is said to benefit the company from increased business opportunities with an aim to enhance its financial position and long-term prospects.
In a statement, the company says it “intends to leverage upon its management team and the experience network and track record of the relevant shareholders, whom have relevant expertise in the supply chain management, amongst others, to diversify into the new business”.
The proposed diversification will also allow the company to “organically grow” its revenue and customer base.
“The group is currently in discussions with suppliers and distributors of such technologies and machineries, with a view to customising them for the group’s expanded offerings in the group’s existing industries and other applicable industries,” reads the statement released by Viking Offshore & Marine.
“It is anticipated that such offerings would involve two business models, namely sub-distributorship of these technologies and machineries to customers, and the offerings of leasing services of these technologies and machineries, such as robots for the customers' businesses,” it adds.
To this end, the company has incorporated a wholly-owned subsidiary in Malaysia, Diverse Supply Chain Sdn Bhd to undertake such offerings. Diverse Supply Chain was incorporated on Jan 19 with a share capital of 1 million ringgit ($322,077).
Proposed name change
In tandem with the proposed diversification, Viking Offshore & Marine intends to change its name to 9R Limited.
The new name is intended to be an abbreviation of its new inspirations, which potentially include these nine Rs, “Rebuild, Reborn, Restore, Recreate, Revamp, Reform, Revive, Remedy and Recast”.
According to the company, the proposed name will more accurately reflect its new strategic direction. It will also allow the company to create a new brand identity and develop a new positioning in the market.
Proposed disposal to interested person
The company is also seeking to dispose its entire issued and paid-up share capital of its wholly-owned subsidiaries, Viking Airtech and Viking Hvac, to Acapella Energy.
Ng Yeau Chong is the sole director and CEO of Acapella Energy. He is also the sole director of Airtech and Hvac, making this an interested person transaction.
According to Viking Offshore & Marine, the proposed disposal will allow the company to exit from a loss-making business segment. The move is also expected to free up the company’s cash flows as the subsidiaries are expected to continue making losses.
Following the waiver of all inter-company debts within the company, which resulted in the one-off gains of approximately $3.3 million, the subsidiaries, which were originally in a net liability position, are in a net asset position of $292,000 as at Dec 31, 2021.
Excluding the $3.3 million, the subsidiaries would have posted a cumulative net loss before income tax, non-controlling interests and extraordinary items of approximately $1.37 million for the FY2021. It would also have recorded a net liability of around $3.008 million as at Dec 31, 2021.
Airtech was incorporated on Oct 4, 1994, and has an issued and paid-up share capital of $60,000 comprising 60,000 shares.
Airtech has direct interests in 100% of the entire issued and paid-up share capital of Viking Airtech (Yantai) Co., Ltd, 49% of the issued and paid-up share capital of Viking Airtech (Shanghai) Co., Ltd, 100% of the entire issued and paid-up share capital of Viking Offshore Malaysia Sdn Bhd, and 100% of the entire issued and paid-up share capital of PT Viking Offshore.
HVAC was incorporated in Singapore on June 20, 2007, and has an issued and paid-up share capital of $10,000 comprising 10,000 shares.
The principal activities of the subsidiaries include designing, package engineering, sales, servicing, installation and commissioning of all kinds of heating, ventilation and air-conditioning systems for the marine and offshore industry.
As at 9.39am, shares in Viking & Offshore Marine are trading 1 cent lower or 10.204% down at 8.8 cents.
