Pursuant to the maturity of $12.5 million in existing redeemable convertible bonds on June 4, Yongnam Holdings has announced that it has entered into a facilitation agreement as well as a bond subscription agreement with the existing bondholders.
Under the facilitation agreement, Yongnam will repay the bondholders $1.5 million, to be satisfied through the issuance of 19.7 million new ordinary shares in the company at an issue price of 7.6 cents per share. In addition, Yongnam will repay a further $3 million to the bondholders over ten equal monthly tranches from June 4, with an interest rate of 7% per annum paid in two tranches.
Under the bond subscription agreement, $9.5 million in new redeemable convertible bonds will be issued to the existing bondholders, to be set off against the existing bonds. The new unsecured one-year bonds will carry an interest rate of 7% per annum.
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The new bonds can be converted into new shares in Yongnam from one month after the date of issuance of the new bonds onwards. The conversion price into the new shares will be based on the simple average of the daily volume-weighted average price (VWAP) per share for the last 10 trading days. The conversion price will not be less than 5 cents or exceed 10 cents per share.
Assuming the full conversion of the convertible bonds into new shares, as well as taking into account the issuance of the 19.7 million new shares, the conversion shares would represent between 13.3% - 23.5% of the enlarged shared capital, depending on the conversion price.
According to Yongnam's filing to SGX on June 4, the issuance of the new shares and convertible bonds would allow the company to settle its repayment obligations in respect of the existing bonds while enabling it to deploy its current cash balances towards its core activities which has been impacted by Covid-19 and ongoing Movement Control Order (MCO) in Malaysia.
Shares in Yongnam closed flat at 7.7 cents on June 4.
