Ever Glory United Launches S\$17 Million Share Placement: What Retail Investors Must Know About This Potential Game Changer

Key Highlights

• Ever Glory United Holdings Limited is proposing a placement of up to 31,000,000 new ordinary shares at S\$0.55 per share, aiming to raise up to S\$17.05 million.
• The placement represents 8.92% of the existing share capital and will dilute existing holdings.
• Net proceeds after expenses are estimated at S\$16.39 million.
• Funds will be split equally between working capital and partial payment for the acquisition of Guthrie Engineering (S) Pte. Ltd.
• The placement price is set at a 7.72% discount to the last traded VWAP.
• The deal is not underwritten and is offered to institutional and accredited investors only.
• No placement to directors, substantial shareholders, or parties related to them unless special approval is obtained.
• No transfer of controlling interest will occur as a result of this placement.
• The new shares will rank pari passu with existing shares and be freely transferable.
• Pro forma financials indicate a significant boost to net tangible assets per share but a dilution in earnings per share.

Detailed Breakdown for Retail Investors

1. What is Happening?

Ever Glory United Holdings Limited has entered into a placement agreement with CGS International Securities Singapore Pte. Ltd. to place up to 31 million new shares to raise up to S\$17.05 million. The placement will be conducted at S\$0.55 per share, representing a 7.72% discount to the previous market close. The offer is a private placement, meaning shares will be offered only to institutional and accredited investors, not the general public.

2. Why Is This Important?

This is a potentially price-sensitive announcement for several reasons:

• Share Dilution: The placement will increase the total share base by approximately 8.92%, potentially diluting existing shareholders’ interests and future earnings per share.
• Discounted Placement: The new shares are being offered at a notable discount, which could pressure the market price in the short term.
• Strategic Use of Funds: Half of the proceeds will fund general working capital, while the other half will support the strategic acquisition of Guthrie Engineering (S) Pte. Ltd., which may influence the company’s growth trajectory and valuation.
• Financial Impact:
  • Net Tangible Assets (NTA) per share will rise from 7.01 cents to 12.12 cents, indicating a stronger balance sheet.
  • Earnings Per Share (EPS) will drop from 3.48 cents to 2.73 cents due to dilution, which could affect share price perception until the new capital is deployed for growth.

3. Placement Mechanics and Safeguards

• The placement is not underwritten but is managed by a reputable placement agent on a best-efforts basis.
• Placees (investors who receive the shares) must confirm they are not involved in share borrowing to subscribe for these shares and will not trigger a transfer of controlling interest in the company.
• No directors or substantial shareholders are participating in this placement, except through their existing shareholdings.
• Company will provide regular updates on the use of proceeds and will detail any material deviations from stated intentions.

4. How Will the Money Be Used?

• 50% for general working capital (e.g., overheads and operating expenses)
• 50% for partial payment of Guthrie Engineering (S) Pte. Ltd. acquisition

Until deployment, funds may be temporarily invested in money market instruments or similar products.

5. Governance, Approval, and Timeline

• The new shares are issued under an existing general mandate, with no need for a special shareholders’ meeting.
• Listing application for the new shares will be made to SGX Catalist.
• Completion is subject to regulatory and contractual conditions being fulfilled, including SGX approval for listing and quotation.
• If any conditions are not met, the placement may be cancelled without liability (other than reimbursement of agreed costs).

6. Financial Effects: What Retail Shareholders Should Expect

The placement significantly improves the company’s asset backing but results in a dilution of earnings per share until additional profits are generated from the acquisition and use of capital.

7. What Should Shareholders Watch For?

• The placement is still subject to regulatory and contractual conditions; failure to meet these could result in cancellation.
• Material changes in use of proceeds, delays in the acquisition, or failure to realize growth opportunities could impact share price.
• The company’s commitment to transparency includes regular updates on fund usage and status reports in financial statements.
• Shareholders should be cautious and consider consulting their professional advisers before making investment decisions based on this placement.

8. Insider and Substantial Shareholder Interests

• Key insiders Sun Renwang (Non-Independent Non-Executive Chairman) and Xu Ruibing (Executive Director and CEO) each hold 37.74% of the company but are not participating in the placement beyond their existing holdings.
• No new controlling interest will be created by this placement.

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Ever Glory United Sets Stage for Major Growth with S\$17 Million Share Placement — What This Means for Shareholders

Disclaimer

This article is for informational purposes only and does not constitute investment advice. Shareholders and potential investors should exercise caution and consult their legal, financial, tax, or other professional advisers before making any investment decisions. The placement is subject to regulatory approval and certain conditions; outcomes are not guaranteed and share prices may be volatile in the near term.

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