HG Metal Manufacturing Limited Launches Non-Underwritten Rights Issue: A Strategic Financial Move
HG Metal Manufacturing Limited has announced a renounceable non-underwritten rights issue, aiming to raise approximately S\$19.35 million. The funds will be utilized for core business expansion, general working capital, and potential strategic investments or acquisitions.
Key Offer Details
The rights issue will involve up to 74,254,237 new shares at an issue price of S\$0.266 each. This offer is on the basis of 10 rights shares for every 27 existing shares held by entitled shareholders as of the record date, 21 November 2024. The rights shares will be listed on the Singapore Exchange Securities Trading Limited (SGX-ST) upon issuance.
Strategic Aims and Financial Impact
The estimated net proceeds, after deducting expenses of approximately S\$400,000, are expected to be S\$19,351,627.04. The allocation of these proceeds is as follows:
- Core business expansion: S\$4.84 – S\$5.81 million (25-30%)
- General working capital: S\$6.77 – S\$7.74 million (35-40%)
- Strategic investments/acquisitions: S\$5.81 – S\$7.74 million (30-40%)
HG Metal Manufacturing Limited’s decision to proceed with a non-underwritten issue is based on the savings in underwriting costs and the confidence demonstrated by the Irrevocable Undertaking from Green Esteel Pte. Ltd., which holds approximately 29% of the company’s issued share capital.
Shareholder Considerations
Shareholders should be aware that failing to participate in the rights issue could result in a dilution of their ownership. Additionally, the trading price of shares may experience volatility due to market conditions and the company’s strategic announcements.
Forward-Looking Statements and Risks
Investors should take note of the forward-looking statements within the offer information statement, which include potential risks such as market competition, volatility in steel prices, and operational challenges. These factors could significantly impact the company’s financial performance and share value.
The company advises shareholders to consult professional advisers to evaluate the implications of participating in the rights issue.
Conclusion
This rights issue represents a significant opportunity for HG Metal Manufacturing Limited to bolster its financial standing and pursue strategic growth initiatives. However, shareholders should carefully consider the potential impacts on their holdings and the overall market dynamics.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Shareholders and prospective investors are advised to conduct their own research or consult with a professional adviser.
