Catalist-listed China Star Food Group has announced the proposed placement of 500 million new ordinary shares at an issue price of 2.4 cents per share, for a total sum of $12 million.
The issue price of 2.4 cents is equivalent to the volume weighted average price per share based on trades done on Sept 21.
The placement shares will be subscribed by 13 investors, including chairman and CEO Liang Chengwang who is subscribing to 60 million of the placement shares, as well as executive director, Duanmu Xiaoyi, who will be allotted 20 million shares.
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Following completion, the company’s issued share capital will increase from 883.8 million shares to 1.38 billion shares. The subscription shares represent approximately 56.57% of the existing issued share capital and will represent approximately 36.13% of the enlarged issued share capital.
The company will be seeking shareholder’s approval in relation to the allotment and issuance of the placement Shares at an extraordinary general meeting to be convened.
The net proceeds from the placement are expected to amount to $11.7 million. $5.2 million will be used fulfil the paid-up share capital requirement of subsidiary Fujian Zixin Biological Potato Co. Another $4 million will be used to fund future expansion of the company’s business in Singapore, while the remaining $2.7 million will be used for working capital.
Based on pro forma financials as of FY2021 ended March, China Star Food’s net tangible assets decreases from 47.14 RMB cents to 34.26 RMB cents.
As at 9.36am, shares in China Star Food are up 0.6 cents or 25% higher at 3 cents.
