GSH Corporation Cancels S\$85.78 Million Proposed Rights Issue After Alternative Financing and Loan Repayment

Key Points from the Announcement

• Cancellation of Proposed Rights Issue: GSH Corporation Limited has announced it will not proceed with its previously proposed renounceable non-underwritten rights issue of up to S\$85,782,764 in aggregate principal amount of 5.30% convertible bonds.
• Purpose of Proposed Rights Issue: The proceeds from the rights issue, together with part of the proceeds from a separate subscription exercise, were intended to facilitate the repayment of the company’s outstanding 2024 convertible bonds (“2024 CBs”).
• Successful Alternative Financing: The company completed a significant subscription agreement with Capitalwise Global Limited, raising S\$111,867,220 through the issuance of 447,468,880 new ordinary shares at S\$0.25 per share.
• Loan Settlement with Major Shareholder: GSH Corporation entered into short-term loan agreements with Dr. Sam Goi Seng Hui, enabling a set-off against S\$75,766,329 in redemption monies payable for his holdings in the 2024 CBs.
• Change in Use of Subscription Proceeds: Following the completion of the subscription, the company re-allocated the net proceeds from repaying the 2024 CBs to instead repay the new shareholder’s loans and other group borrowings.

Details and Implications for Shareholders

Shareholder Entitlements: The original rights issue would have allowed entitled shareholders to subscribe for 17 convertible bonds for every 400 existing shares held, in denominations of S\$1.00 each. However, this offer and any associated entitlements have now been cancelled.

Rationale for Cancellation: Since the financial objectives of the rights issue have been achieved through alternative means (the subscription by Capitalwise Global Limited and the set-off against shareholder loans), the company determined that the rights issue was no longer necessary.

Potential Price Sensitivity: The cancellation of the rights issue and the successful raising of funds through a large strategic investment are both significant developments. The elimination of dilution risk from the convertible bonds and the entry of a substantial new investor could positively affect market sentiment. Conversely, changes in the allocation of proceeds and the refinancing of existing debt may have longer-term impacts that investors should monitor closely.

Caution to Shareholders: The company specifically advises shareholders and potential investors to exercise caution when dealing in GSH Corporation shares, and to consult their professional advisers if in doubt about their investment actions.

Conclusion

The cancellation of the proposed rights issue, completion of a major equity subscription, and refinanced loan arrangements mark significant changes to GSH Corporation’s capital structure. These developments could influence the company’s share price in the near term, and shareholders should stay informed about further announcements and the company’s financial management strategies.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their own financial advisers before making any investment decisions related to GSH Corporation Limited.

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