SINGAPORE - Offshore services company KTL Global has agreed to issue S$5.35 million in five-year, zero-coupon convertible bonds to a Chinese investment firm to raise money for growth and expansion, according to filings on the Singapore Exchange on Monday (March 4).
The bonds due 2024 will be sold at 95 per cent of the principal amount, and may be converted after the first year into new KTL shares at an initial conversion price of S$0.03963 per share. The conversion price represents an initial conversion discount of 17.4 per cent to KTL's volume-weighted average price of S$0.048 on March 1. If the bonds are not converted they will be redeemed at 100 per cent of par.
Assuming full conversion, the conversion shares will represent 29.96 per cent of KTL's enlarged share capital. The investor, Zhong Jian Wu Lian (Beijing) Company, does not currently have any existing connection, including business relationships, with the company, its directors and substantial shareholders.
The agreement is "strategic and could provide further opportunities for strategic alliances and/or business relationships between the subscriber and the company," KTL Global said. It also said the bond issue was also aimed at strengthening the group's financial position and flexibility to capitalise on growth opportunities.
KTL estimates net proceeds of $5.01 million from the offering – not $5.28 million as stated in an earlier announcement – of which 80 per cent will be used for the group's growth and expansion, with the remainder for working capital.
The company will seek shareholders' approval for the deal.