Yongnam Holdings, on Jan 19, entered into a loan agreement as well as a conditional subscription agreement with UEM Assets on Jan 19.
UEM Assets is a holding company that has a share capital of $10,000 and is wholly-owned by Ng Eng Guan. Ng is the sole director of UEM Assets and is the founder and managing director of U E Metal Enterprises Pte Ltd, a company that sources metal coil and manufactures and distributes metal sheets and metal finished products.
According to Yongnam, the transactions will help put the company in a position to secure infrastructural projects that have been delayed by the Covid-19 pandemic and are now recommencing.
The loan agreement is for a term loan of $3 million while the conditional subscription agreement is for UEM Assets to subscribe $20 million worth of new ordinary shares in Yongnam Holdings. The conditional subscription agreement will also see UEM Assets subscribing for $10 million worth of unlisted and non-transferable share options. Each option carries the right to subscribe for one new ordinary share in Yongnam.
The loan agreement comes with an interest rate of 3% per annum (p.a.) and is repayable by Dec 31, 2023.
Under the conditional subscription agreement, UEM Assets will be allotted and issued 1.11 billion shares at the subscription price of 1.8 cents apiece. In addition, it will be granted 505.05 million unlisted and non-transferable options for a consideration of $1.
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The 1.11 billion shares represent about 157.84% of the total number of shares in Yongnam currently and 61.22% of the enlarged share capital. The subscription price represents a discount of around 29.1% to the volume weighted average price (VWAP) of 2.54 cents per share based on the trades done on Nov 22, 2022, the last full market day before Yongnam’s trading halt.
Further to its statement, Yongnam revealed that the company will pursue other corporate actions including a debt restructuring exercise of its wholly-owned subsidiary, Yongnam Engineering & Construction and settlement arrangements in relation to existing facilities to be entered into by the company with its respective lenders.
The debt restructuring exercise for Yongnam Engineering & Construction will be done through a scheme of arrangement to restructure the subsidiary’s debts and liabilities owing to its unsecured creditors.
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The completion of the proposed subscription and proposed grant of options is conditional upon the proposed scheme of arrangement being binding on Yongnam Engineering among other things.
In addition to the agreements, Yongnam will be pursuing a rights issue for its existing shareholders at the subscription price for each rights share to raise $6.3 million. Under the proposed rights issue, Yongnam’s shareholders are entitled to a new share for every two shares held.
In its filing, Yongnam says it will use the proceeds from the subscription to repay all outstanding amounts under the loan. The balance amounts will go towards the partial settlement of the cash component under the proposed scheme of arrangement, payment of professional fees and working capital.
Shares in Yongnam last traded at 2.6 cents before its trading halt on Nov 23, 2022.
