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Sunpower Group Launches S\$99.6 Million Convertible Bond Rights Issue to Refinance Existing Debt

Key Highlights:

• Renounceable rights issue of up to S\$99.61 million in convertible bonds
• Offered at 125 convertible bonds for every 1,000 existing shares
• 7.00% interest rate, convertible into shares at S\$0.25 per share
• Proceeds to fully repay existing US\$130 million convertible bonds
• Major shareholders provide irrevocable undertakings to subscribe

Sunpower Group Ltd, a Singapore-listed environmental protection company, has announced a major refinancing initiative through a renounceable rights issue of convertible bonds. The company aims to raise up to S\$99.61 million to repay its existing convertible bonds and strengthen its balance sheet.

Rights Issue Details

The rights issue will offer 125 new convertible bonds for every 1,000 existing shares held by entitled shareholders. Each convertible bond has a principal amount of S\$1.00 and will be issued at par. The bonds will carry a fixed interest rate of 7.00% per annum, payable semi-annually.

Bondholders will have the option to convert their bonds into new ordinary shares of Sunpower at a conversion price of S\$0.25 per share. This represents a potential dilution of up to 398,438,568 new shares if all bonds are converted.

Use of Proceeds

Sunpower intends to use the entire net proceeds, estimated at S\$98.51 million after deducting expenses, to fully repay its existing convertible bonds. The company currently has outstanding convertible bonds of approximately US\$130 million issued in two tranches.

This refinancing move is aimed at addressing the company’s near-term debt obligations and improving its capital structure. By replacing the existing USD-denominated bonds with SGD-denominated ones, Sunpower may also reduce its foreign exchange risk exposure.

Shareholder Support

Major shareholders of Sunpower, including its founders and substantial investors, have provided irrevocable undertakings to subscribe for their pro-rata entitlements and apply for excess bonds. This demonstrates strong insider confidence in the company’s prospects and ensures a high likelihood of success for the rights issue.

Potential Impact on Investors

For existing shareholders, the rights issue presents an opportunity to participate in the company’s refinancing efforts and potentially benefit from the attractive 7.00% interest rate. However, they should also consider the potential dilution impact if the bonds are converted into shares in the future.

The successful completion of this rights issue could be viewed positively by the market, as it would address Sunpower’s near-term debt maturity and provide greater financial flexibility. However, investors should also consider the increased interest expense from the new bonds and its impact on the company’s profitability.

Market Reaction

The announcement of this rights issue may lead to increased trading activity in Sunpower’s shares as investors assess the implications of the refinancing. The stock price could experience volatility in the near term as the market digests this information.

Looking Ahead

Sunpower’s ability to successfully refinance its debt through this rights issue will be crucial for its financial stability and future growth plans. Investors should closely monitor the subscription results and any subsequent announcements from the company regarding its debt management and business strategies.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or an offer to buy or sell securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The information presented here is based on the offer information statement and may be subject to change.

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