SunMoon Food Company, whose business is in food supply chain, plans to raise net proceeds of around $2.82 million by placing out 125 million new shares.
The placement shares, at 2.3 cents each, is a premium of around 5% to the weighted average price of 2.2 cents on Feb 17, the last trading day before the placement announcement was made on Feb 18.
The investor is Champion Financial (Hong Kong), an investment holding company fully-held by one Song Xiao Jun.
According to SunMoon Food, the new capital raised is to help fund general working capital to expand the company's business scale.
Upon completion of the placement, Song will hold 13.84% of the company, overtaking Gary Loh's 6.61%, a former broker who used to control SunMoon Food. SunMoon Global, the new name of Yiguo General Food, will still be the dominant shareholder with 51.57%.
Back in Aug 18, SunMoon Food had already announced a placement agreement where Song will take up 125 million new shares at 2.8 cents, raising net proceeds of around $3.4 million.
See also: VCPlus to raise just $600,000 from placement instead of $6.66 million after investors' u-turn
However, certain conditions precedent were not fulfilled in the six months since, and therefore, the first placement agreement was allowed to lapse.
According to SunMoon Food, Song is "experienced in supply chain management, and has held a number of management positions in several companies between 2001 and 2009.
These companies include Shanghai Huaying Warehousing Co and Shanghai Champion Warehousing Co.
See also: UMS raises $51.6 mil after placement was 2.55 times covered
Via Champion Financial (Hong Kong), Song has also invested in other food services businesses such as Shanghai Lewo Brands Management Co and Duin Tea.
SunMoon Food says that Song "has and maintains close cooperation with top-tier food companies in China and wishes to diversify his investment portfolio and increase his investment allocations in Southeast Asia, the company says.
For the 3QFY2022 ended Dec 31 2022, SunMoon Food reported a loss of $478,000, versus red ink of $131,000 in the year-earlier period. Revenue, meanwhile, was down 23% y-o-y to $9.82 million.
As at Dec 31 2022, the company's trade receivables from third parties have increased to $8.66 million, from $7.17 million as at March 31 2022, as the company made more credit sales and "certain customers" did not pay on time.
On the other hand, trade receivables from SunMoon's own controlling shareholder Yiguo and related entities had decreased to $57,000 as at Dec 31 2022, versus $116,000 as at March 31 2022.
In its earnings commentary, SunMoon says that while the economic activities in China have been improving with changes in Covid-19 policy, the impact on its operations is expected to be minimal and gradual.
"The group will continue to focus on export of products (including Chinese fresh fruits) from China to Southeast Asian markets and import of products (including fresh produce) to China market.
"Barring unforeseen circumstanceswe will continue to execute the strategy we have put in place to focus on the main product categories of Fuji apple and Pangasius fish," the company adds.
