The Singapore eDevelopment Ltd (SeD) has proposed to issue listed and secured Perpetual Bonds of up to S$300 million (US$240 million) to help accelerate its strategy for corporate recovery.
Perpetual Bonds will be issued in denominations of S$100 (US$80) and will entitle bond holders to receive annual distribution of 8 percent, which is payable twice a year in arrears. Bond holders will also be conferred the right to receive a pro-rated 30 percent of net profits after tax, generated from the deployment of the bonds into property development projects in U.S., Australia, China and Singapore.
Although the bond is perpetual, SGX Catalist-listed SeD will be allowed to redeem it at its face value plus accrued interest on top of an additional six months' interest. Application will be made to the Singapore Exchange Securities Trading Ltd (SGX-ST) for the listing and the quotation of the Perpetual Bonds on the SGX-ST.
In February 2014, SeD's 60 percent owned subsidiary, 150 CCM Black Oak, took a stake in a project to sub-divide 136 acres of land in Houston, Texas. As of 2 September 2014, 35 percent of the 398 lots have been sold for a total of US20.72 million. SeD is confident that its "projects will deliver a reasonable share of profit that can cover the financing costs of the Perpetual Bonds," said Chan Heng Fai, the company's CEO and single largest shareholder. He added that the bond offering is a unique capital structure which will allow SeD to raise funds from a secured fixed-income instrument, in which profits from property projects are shared between SeD and shareholder s.
SeD is also proposing for a 100-to-one share consolidation, which will reduce its issued share base from 28 528 908 040 to 285 289 080. The move will raise the profile of SeD amongst institutional investors, reduce share price volatility and lower transaction costs. Besides that, it will reduce the bid/ask spreads from the current 30 percent to 50 percent to approximately 1 percent, and enhance trading liquidity, said SeD.
SeD added that the two above mentioned proposals, as well as a proposal to issue a performance share plan, are subject to approvals from the Singapore Exchange and shareholders.
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