TOTM Technologies Launches S\$3.2M Share Placement at 8% Discount: What Investors Need to Know

Key Highlights of the Announcement

• Proposed Placement of up to 135 Million New Shares: The company is planning to issue up to 135,000,000 new ordinary shares at S\$0.0239 per share, representing a discount of approximately 7.9% to the previous day’s trading average.
• Potential Fundraising of S\$3.23 Million: If fully subscribed, TOTM Technologies will raise up to S\$3,226,500 before expenses.
• Placement Not Underwritten: The placement is on a best-efforts basis, not underwritten, and will be managed by SAC Capital Private Limited.
• Significant Dilution: The new shares will account for about 9% of the enlarged share capital.
• No Transfer of Control: Shares will not be placed to existing directors, substantial shareholders, or parties that would result in a change of control.
• Shareholder Approval Required: The placement is subject to shareholder approval at an upcoming EGM, with a circular to be sent in due course.
• Use of Proceeds: Net proceeds (about S\$3.03 million after estimated S\$200,000 in fees) will be used for general working capital, supporting ongoing and new projects.
• Financial Impact: The placement is expected to improve the company’s net tangible assets per share and reduce loss per share due to the larger capital base.
• SGX-ST Approval Pending: The new shares will be listed on Catalist, subject to regulatory approval.
• No Insider Benefit: Directors and substantial shareholders are not involved, and end-placees are not acting in concert or connected to management.
• Material Developments Cautioned: There is no certainty that the placement will be completed, and investors are warned to monitor updates closely.

In-Depth Details for Retail Investors

Background and Rationale

TOTM Technologies Limited has announced a significant move to strengthen its balance sheet by proposing a private placement of up to 135,000,000 new ordinary shares at S\$0.0239 each. This price represents a discount of nearly 8% to the last traded average, potentially making it attractive for new investors but raising dilution concerns for existing shareholders.

The placement aims to bolster the company’s financial position and enhance liquidity, providing funds for general working capital and supporting both ongoing and new business projects. Management believes this cash injection is beneficial for the company’s growth and financial health.

Key Terms and Structure

• Issue Size: Up to 135 million shares, about 9% of the enlarged share capital.
• Pricing: S\$0.0239 per share, at a 7.9% discount to the prior day’s average trading price.
• Gross Proceeds: Up to S\$3,226,500.
• Net Proceeds: Approximately S\$3,026,500 after deducting S\$200,000 in estimated placement costs (including a 4% commission to SAC Capital Private Limited).
• Eligibility: Shares will not be placed with insiders (directors or substantial shareholders) or anyone who could result in a change of control.
• Shareholder Approval: Specific approval will be sought at an extraordinary general meeting (EGM); a circular with full details will be sent to shareholders.
• Timeline: Completion is targeted within 12 weeks of the placement agreement date, subject to all conditions being met.

Financial and Shareholder Impact

• Dilution: The new shares will dilute existing shareholders by about 9%.
• Balance Sheet: The company’s net tangible assets (NTA) per share are projected to rise from 1.37 cents to 1.45 cents post-placement.
• Loss Per Share (LPS): LPS is expected to improve from (2.29) cents to (2.10) cents due to the enlarged capital base, even as total losses increase marginally from S\$31.31 million to S\$31.51 million.
• Proceeds Use: Funds will be used primarily for working capital, including ongoing and new projects. Any unused proceeds may be temporarily invested in bank deposits or marketable securities.
• Transparency: The company pledges to make periodic announcements on the use of funds and will disclose any material deviations from the stated use.

Placement Agent and Safeguards

• Placement Agent: SAC Capital Private Limited is acting as the placement agent and will receive a 4% commission.
• End-placee Safeguards: End-placees are not connected to insiders, will not receive any special benefit, and will not act in concert. There are no share borrowing arrangements or resulting controlling stake changes.
• Regulatory Approval: The placement is contingent on SGX-ST approval for listing the new shares on Catalist, and trading in the company’s shares must not be suspended or delisted as of the completion date.

Important Shareholder Considerations and Potential Price Sensitivities

• Participating at a Discount: The discounted placement price may pressure the market price in the short term due to potential arbitrage or dilution concerns.
• EGM Approval Risk: The placement is subject to shareholder approval. If not approved, the placement will not proceed.
• Completion Uncertainty: Shareholders are cautioned that there is no certainty the placement will be completed; all conditions must be met.
• Material Developments: Any material adverse events before completion could jeopardize the placement.
• Ongoing Disclosure: The company commits to ongoing updates regarding the use of proceeds and will report on any deviations from stated intentions.

Conclusion

This proposed placement is a significant funding initiative that could impact TOTM Technologies’ share price both in the short- and long-term. The discounted offering may lead to near-term price volatility, but the improved capital position could benefit the company’s prospects if funds are effectively deployed. Shareholders should carefully monitor company updates, attend the EGM, and consider the dilution versus the company’s improved liquidity.

Disclaimer: The above article is for informational purposes only and does not constitute investment advice. Investors should conduct their own due diligence and consult their professional advisers before making any investment decisions regarding TOTM Technologies Limited. The author and publisher assume no responsibility for any actions taken based on the information provided.

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