Leader Environmental Technologies has entered into a placement agreement with Stirling Coleman Capital as the placement agent on Jan 31, where the latter has offered to subscribe to up to 352.9 million new ordinary shares in the capital of Leader Environmental Technologies at an issue price of 17 cents per share.
This would amount to a total consideration of some $60.0 million.
Leader Environmental Tech and Stirling Coleman Capital may increase the size of the placement and issue up to 117.6 million shares to raise additional proceeds of $20.0 million, bringing the total gross proceeds of the placement to $80.0 million.
The placement price represents a discount of some 9.2% to the volume weighted average price (VWAP) of 18.7 cents per share in Leader Environmental Tech for trades done on the SGX-ST on Jan 29, the last full market day before the agreement was signed.
It also represents a premium of 14.1% to the VWAP of 14.9 cents per share for the one-month period prior to Jan 29.
The discount of 9.2% is within the 10% discount limit under SGX-ST rules.
Assuming the upsize option is not exercised, and all placement shares are placed out, the issued share capital in Leader Environmental Tech will increase from 1.33 billion shares to 1.68 billion shares.
Should the upsized option be exercised in full, the company’s issued share price will increase to 1.80 billion shares.
SEE: Leader Environmental Technologies to set up JV with Nanosun with total investment of $10 mil
Up to 117.6 million placement shares will be allotted to the chairman and CEO of the company, Dr Lin Yucheng, which is subject to the approval of the shareholders of the company at an extraordinary general meeting (EGM).
No other director or substantial shareholder in the company will receive the same such shares.
The placement will not result in any transfer of controlling interest in the company as well.
As at Jan 31, Lin holds 198 million shares in Leader Environmental Tech, representing 14.9% of the entire share capital in the company.
Should the placement shares be placed out and the upsize option is not exercised, Lin’s stake in the company will increase to 18.8%.
Should the upsize option be exercised, Lin will hold a 17.6% stake in the company instead.
Under the placement agreement, Stirling Coleman Capital will be paid a commission equivalent to 1.5% of the placement price per placement share.
The agreement should be completed by 6pm on the seventh business day after all conditions have been satisfied, or a date that has been mutually agreed on by all parties.
According to Leader Environmental Tech, the net proceeds of the $1.7 million and $8.7 million previously raised through the placement of 120 million shares and a renounceable underwritten rights issue in May 2020 and September respectively have already been used for working capital purposes.
The company says it has undertaken the placement so as to invest in the build-operate-transfer (BOT) contract to treat the municipal sludge in Tianjin City.
Of the net proceeds raised from the placement agreement, about 95% will go to the company’s business investments and acquisitions of environmental related businesses, payments of tender deposits, performance bonds and other project related expenses.
The remaining 5% will go to general working capital purposes.
Assuming the upsize option is not exercised, the net asset value (NAV) per share as at Dec 31, 2019, in Leader Environmental Tech will increase from 6.96 RMB cents (1.43 cents) per share to 22.56 RMB cents per share on a pro forma basis.
Assuming the upsize option is exercised in full, the NAV per share will increase to 26.38 RMB cents per share as at Dec 31, 2019 on a pro forma basis.
The placement will be on a best-effort basis and is not underwritten by the placement agent.
Accordingly, no prospectus or offer information statement will be issued in relation to the placement.
Shares in Leader Environmental Tech closed 0.3 cent higher or 1.7% up at 18.2 cents on Jan 29.
