ISOTeam Unveils Bold S\$10 Million Fundraising to Accelerate Drone Technology and Digitalisation

Key Takeaways for Investors: Major Share Placement & Convertible Bond Issue Announced

ISOTeam Ltd., a Singapore-based company, has announced a substantial fundraising initiative that could reshape its future and potentially impact its share price. The Board revealed plans for a dual capital-raising strategy, combining a large private share placement and an unlisted convertible bond issue to raise up to S\$10 million in gross proceeds. This move is targeted at supporting the final development and commercialisation of the Group’s proprietary drone painting technology, and to further drive its digital transformation.

Full Details of the Proposed Placements

• Share Placement: Up to 86,158,138 new ordinary shares will be issued at S\$0.08126 per share, representing a 9% discount to the previous day’s volume-weighted average price of S\$0.08930. This totals an aggregate consideration of around S\$7,001,210.
• Convertible Bonds: Unlisted convertible bonds aggregating up to S\$3,000,000 will be issued. These bonds are due in September 2028 and can be converted into new shares at S\$0.09126 per share—a 2.19% premium to the previous trading VWAP. If certain takeover or exit events occur, the conversion price may be adjusted downwards—but not below S\$0.08126.
• Placement Agents: SAC Capital Private Limited is appointed for the share placement, while Soochow Singapore Capital Markets (Asia) Pte. Ltd. is engaged for the convertible bonds. Maybank Securities acts as sub-placement agent for both.
• No Underwriting, No Prospectus: Both placements are non-underwritten and carried out under private placement exemptions of the Securities and Futures Act, with no prospectus lodged.

Implications for Shareholders – Dilution, Control, and Placement Restrictions

• Dilution: The placement shares represent approximately 12.18% of current issued share capital, and 10.86% of the enlarged share capital post-issue. The convertible bonds (if fully converted) could add up to 4.96% more shares. In total, these new shares may significantly dilute existing shareholders.
• Control and Related Parties: Shares and bonds will NOT be placed to directors, substantial shareholders, or interested persons under Catalist Rules, nor will they result in a transfer of controlling interest.
• Commission: Placement agents will receive a 3% commission on the funds raised, with an additional 1% end-placees’ commission charged to investors.
• No Shareholder Approval Needed: The fundraising falls within the pre-approved general mandate, so no specific shareholder vote will be required.

Convertible Bond Features – Investor-Friendly Terms?

• Maturity: 36 months from issuance, with 4% annual interest payable semi-annually.
• Conversion: Investors can convert bonds into shares any time from one day after issue until 30 days before maturity, minimum S\$250,000 each.
• Adjustable Conversion Price: If a takeover or delisting offer occurs and the offer price is below the conversion price, bondholders can convert at the lower offer price (but not less than S\$0.08126).
• Non-Transferable & Unlisted: Bonds cannot be traded and are not listed on any exchange.
• Redemption: If not converted, bonds will be redeemed at face value plus accrued interest at maturity.

Use of Proceeds – Clear Strategic Focus

ISOTeam plans to use the net proceeds (estimated S\$9.65 million after S\$349,000 in fees/expenses) as follows:

• General Working Capital: S\$3.86 million (40%) – including hiring drone pilots, software engineers, and related specialist staff.
• Commercialisation of Drones: S\$3.86 million (40%) – ramping up market launch activities.
• Final Development of Drones: S\$1.93 million (20%) – completing R&D and production readiness.

Funds may be temporarily parked in banks or short-term instruments until deployed.

Financial Impact – What Happens to ISOTeam’s Balance Sheet and EPS?

• Share Capital: Will rise from S\$35.0 million to up to S\$45.0 million.
• Issued Shares: Increase from 707.2 million to as many as 826.3 million (if all bonds convert and shares are placed).
• Net Tangible Assets per Share: Improves from 5.70 cents to up to 6.05 cents per share.
• Earnings Per Share: EPS drops from 0.92 cents to 0.68 cents post-placement, due to dilution even though capital base increases.

Risks and Cautionary Notes for Investors

• Completion Uncertainty: The placements are subject to multiple conditions precedent. There is no guarantee the deals will close.
• Price Sensitivity: The substantial discount on the placement shares and the dilution could pressure the share price. However, the targeted use of proceeds in high-growth drone technology and digitalisation initiatives could unlock medium-term upside if those projects succeed.
• No Transfer of Control: Investors should note the placements are structured to avoid any change in control or undue influence by insiders or related parties.
• Market Watch: Shareholders are urged to closely monitor company announcements for further updates, and to exercise caution in trading ISOTeam shares pending successful completion of the fundraising.

Directors’ and Placement Agents’ Confirmations

• Directors: State that existing resources cover short-term needs, but the fundraising is strategic for new growth.
• Placement Agents: Confirm no placements to directors/substantial shareholders/related parties, no controlling interest changes, and no share borrowing arrangements.

Investor Action Points

• This fundraising is a major strategic move, with significant dilution but strong support for new technology and digitalisation.
• Share price may be affected by both the dilution and the perceived value of the new drone initiatives.
• Watch for further updates, especially on completion and deployment of funds.

Disclaimer: This article is for informational purposes only and does not constitute financial advice or an offer to buy or sell any securities. Investors should conduct their own due diligence and consult professional advisers before making any investment decisions. The information is based on company announcements and may be subject to change. The author and publisher assume no liability for any loss arising from reliance on this article.

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