Lincotrade & Associates is looking to raise $2.2 million by placing 10 million shares at 22 cents per share.
The company entered into a placement agreement with SAC Capital on Nov 24. The proposed placement is not underwritten and will not be undertaken by way of an exempt offering per Section 272B of the Securities and Futures Act 2001 (SFA), which covers private placements. Accordingly, no prospectus, offer document or offer information statement will be issued.
The price represents a premium of about 3.14% to the volume weighted average price (VWAP) of 21.33 cents per share for trades done on Nov 21, which is the last full market day before the placement agreement.
The placement shares make up some 5.81% of Lincotrade’s existing issued and paid-up share capital of 172 million shares. The shares will represent 5.49% of the company’s enlarged share capital of 182 million and will not be placed to any director or substantial holder of the company.
According to Lincotrade, the proceeds raised from the placement will be used to enhance its financial position and finance its ongoing projects in view of its higher order book. On Nov 17, Lincotrade announced that it secured new projects with a total contract value of $61 million, bringing its order book to a record high of $113 million.
Excluding fees and expenses of $91,000, the company expects to receive $2.11 million from the placement, which will go towards working capital purposes.
Matthias Chan, head of equities research at SAC Capital, noted that it has "been a while" since placements were conducted at a premium. In this case, Chan notes that the higher placement price reflects investors' confidence over the company's "robust fundamentals" and strong earnings trajectory.
"In the case of Lincotrade, the commercial fit-out industry is in a sweet spot with strong demand and higher margins," he says. "On the macro front, the optimism generated by the Equities Market Development Programme (EQDP) will have lifted valuations. This will ensure placements are more fairly priced as investors seek out longer term earnings prospects."
As at 2.23pm, shares in Lincotrade are trading flat at 21 cents.
