MEDTECH company Biolidics : 8YY 0% entered a subscription agreement with Chinese citizen Zhou Chao to issue and allot 83 million new shares at S$0.0121 per share on Friday (Dec 22).

 

The issue price implies a 9.7 per cent discount to the volume-weighted average price of S$0.0134 for trades done on Thursday.

 

As at Friday, gross proceeds of S$1 million from the private placement represent about one-eighth of the company&rsquo s market capitalisation of S$8.6 million. The 83 million new shares represent about 12.6 per cent of the issued share capital on the day.

 

Upon completion of the proposed subscription, the new shares will represent 11.2 per cent of the enlarged issued share capital.

 

The subscriber, Zhou, is the director and co-founder of ACV Tech, a Singapore-based company trading semiconductor foundry equipment, said Biolidics, noting that Zhou entered the agreement &ldquo purely for financial investment purposes&rdquo .

 

Biolidics has been troubled with negative working capital. For the nine-month financial period ended Sep 30 of the current financial year, the group recorded a net loss of about S$1.6 million and a net operating cash outflow of approximately S$1.5 million.

 

The board noted that after deducting estimated expenses, the remaining S$930,000 of the proceeds will be used as working capital to improve the company&rsquo s cash flow, &ldquo to achieve continued trading status on Catalist and deliver shareholder value&rdquo .

 

Assuming the proposed subscription was completed on Dec 31, 2022, Biolidics&rsquo net tangible liabilities per share would be reduced by 61.5 per cent. Its loss per share would be S$0.0127, down from S$0.0143.

 

On Nov 21, the company issued 98.5 million new shares at S$0.0119 apiece to raise S$1.2 million from Zhu Hua, a Chinese national who owns 99.9 per cent of China-based investment management company Zhenghe Antai Investment Management. The company had then fully repaid the debt owing to Clearbridge BSA on Nov 30.

 

Biolidics 8YY 0.00% has announced that it has entered into a second deed of partial settlement with Clearbridge BSA in relation to its acquisition of the entire issued and paid-up share capital of Biomedics Laboratory.

 

Consequently, the company also announced that it had reallocated $670,000 of the proceeds from its November 2022 rights issue to be used towards the repayment of bank borrowings and the deferred consideration of some $2.14 million owed to Clearbridge BSA.

 

The proceeds from the rights issue was originally intended to be used for the company&rsquo s working capital purposes. However, Biolidics&rsquo board of directors says the reallocation will enable the group to meet its debt obligations on a timely basis.

 

On Nov 23, Biolidics partially settled $800,000 of the deferred consideration by way of cash   using the net proceeds reallocated from the rights issue proceeds.

 

The outstanding figure of some $1.34 million will be payable to Clearbridge BSA within two days of receiving the proceeds from Zhu Hua&rsquo s proposed subscription of 98,500,000 new Biolidics shares.

 

Biolidics Limited 8YY 0.00% has entered into a new subscription agreement for the allotment of 98,500,000 new ordinary shares at a subscription price of 1.19 cents per share, amounting to an aggregate subscription of $1,172,150.

 

The announcement comes after the company failed to obtain shareholder approval for its previous subscription agreement at its extraordinary general meeting (EGM) on Nov 21.

 

The company had previously proposed the subscription of 230,769,231 new ordinary shares at an issue price of 0.65 cents per share to raise gross proceeds of $1,500,000 from Zhu Hua, managing director and 99.9% owner of Beijing Zhenghe Antai Investment Management.

 

The new subscription shares will be allotted and issued to Zhu, pursuant to the general mandate obtained from shareholders at Biolidics 8YY 0.00% &rsquo annual general meeting (AGM) held on April 28.

 

As at April 28, the company had an issued and paid-up share capital, excluding treasury shares and subsidiary holdings, of 559,126,605 shares, putting the maximum number of shares that may be issued other than on a pro-rata basis at 279,563,302. 

 

Biolidics had not issued any shares pursuant to the general mandate as at Nov 21.

 

Since the proposed allotment and issuance of 98,500,000 subscription shares falls within the maximum number of 279,563,302 shares that may be issued, the prior approval of shareholders is not required for the issuance of the subscription shares under the new subscription agreement.

 

Biolidics announced it has entered into a binding term sheet with Mr. Zhu Hua for the proposed subscription of 230,769,231 new ordinary shares in the company, at an issue price of $0.0065 per subscription share to raise gross proceeds of $1.5 million.

 

Zhu Hua is a citizen of the People&rsquo s Republic of China and is the managing director and owns approximately 99.9% of the issued and paid-up share capital of Beijing Zhenghe Antai Investment Management Co, an investment management company established in the PRC. Zhu has has worked in several equity investment fund companies and has about 20 years' experience in investment management. In particular, he has more than 10 years of investment experience in the internet, mobile internet and multi-channel network industry.

 

The amount raised is likely to be used to repay debt.