The shares will be issued at a price that references Hong Lai Huat’s weighted average trading price of the shares over a 14-day period before the new shares are issued.
The proposed placement is not underwritten and is undertaken under the exemption under Section 272B of the Securities and Futures Act 2001. The section states that the offers are made to no more than 50 people within 12 months and that none of the offers are accompanied by any offers or advertisements calling attention to the offer or intended offer. It also states that “no selling or promotional expenses are [to be] paid or incurred in connection with each offer” with the exception fees incurred for administrative or professional services, or by way of commission or fee for services rendered by parties including the holder of a capital markets services licence and an “exempt person in respect of dealing in capital markets products that are securities or securities‑based derivatives contracts”.
In its Jan 20 filing, Hong Lai Huat notes that Ong is acting in concert with Ong Bee Huat, the founder and executive director of the company; Ong Bee Huat’s spouse Lau Yen Eng and Ong Jia Ming, the executive director of the company. Ong Bee Huat owns a 43.3% stake, while Lau and Ong Jia Ming hold respective stakes of 2.01% and 3.98%. Including Ong’s stake, all four collectively own 47.28% of the voting rights of the company.
Following the proposed placement, Ong and his family will hold a 51.1% stake in the company’s enlarged share capital. If completed, the proposed placement meant that Ong and his family would have had to make a general offer for the company’s shares under Rule 14 of the Singapore Code on Take-overs and Mergers.
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Ong has since obtained and received a waiver (also known as a whitewash waiver) on Jan 20 from the Securities Industry Council to exempt him from the obligation to make a general offer. The waiver is conditional upon several factors including receiving the approval of majority of Hong Lai Huat’s shareholders to waive off their rights to receive a general offer at an extraordinary general meeting (EGM). It is also conditional about Ong and his family not acquiring shares or instruments convertible into and options in respect of the shares during the period between the proposed placement and the date of approval from the company’s shareholders. Hong Lai Huat will also have to appoint an independent financial adviser to advice its independent shareholders on the matter.
According to Hong Lai Huat, the proceeds raised will go towards the company’s general working capital.
Shares in Hong Lai Huat closed 0.2 cents lower or 3.45% down at 5.6 cents on Jan 20.
