SHARES of mainboard-listed Halcyon Agri Corp recovered some of their losses on Monday, after the natural rubber supplier proposed to issue guaranteed perpetual securities in place of a rights issue.

 

The counter climbed as much as 18.2 per cent or four Singapore cents to 26 cents within the first minute of the opening bell, according to Shareinvestor data. It eased to finish the day at 23.5 cents, up 1.5 cents or 6.8 per cent from Friday' s close. About 6.3 million shares changed hands.

 

Last Friday, Halcyon Agri said the perps would be a " more optimal and equitable" funding option given the current market conditions, compared with the rights issue.

 

The perps will raise greater net proceeds than the previously proposed rights issue, which would have brought in some US$125.4 million in net proceeds if fully subscribed.

 

In addition, Chinese state-owned enterprise Sinochem International Corp (SIC), which owns Halcyon Agri' s major shareholder Sinochem International Overseas, plans to provide a corporate guarantee to support the issuance of up to US$200 million of perps.

 

The guarantee, which is subject to SIC shareholders' approval, will make the perps more marketable with institutional investors, Halcyon Agri said. This will give more certainty on the amount of proceeds that can be raised from the perps, as compared to the rights issue, as the latter' s issue price " may not be attractive to investors" , it added.

 

Halcyon Agri also pointed out that the perps issuance will not lead to the dilution of minority holdings, unlike with the rights issue.

 

Two months ago, the company proposed a renounceable non-underwritten one-for-two rights issue of up to 797.5 million new shares at 22 Singapore cents apiece. The proposed issue price was at a 36.2 per cent discount to the last transacted price of 34.5 cents per share for trades done on June 19. It was also at a 35.7 per cent discount to the volume weighted average price of 34.2 cents traded over the five consecutive market days including June 19, and a 27.4 per cent discount to the theoretical ex-rights price of 30.3 calculated based on June 19' s closing price.

 

On June 22, the day the rights issue was announced, the stock' s price tumbled 26.1 per cent or nine cents to close at 25.5 cents. Since then, the counter had fallen about 20 per cent as at Friday.

 

" In light of the recent share price movements and in consideration of current market conditions, the company has been exploring various means of alternative equity fundraising options which are more suitable under the prevailing circumstances," said Halcyon Agri on Friday.