Shares of supermarket chain operator Sheng Siong fell yesterday on news that it is placing out $80.4 million worth of new shares to fund its expansion plans here.
Its share price tumbled 3.5 cents or 4.9 per cent to 67.5 cents, the counter's worst single-day performance for the year.
The company said early yesterday that it will offer 120 million shares by way of a placement at an issue price of 67 cents per share.
That price was at a discount of about 5.37 per cent to the volume weighted average price of 70.8 cents on Wednesday, the trading day before the placement agreement was signed.
The placement shares represent about 8.67 per cent of the issued share capital of about 1.38 billion shares.
They amount to some 7.98 per cent of the enlarged issued share capital of 1.5 billion shares after the issuance and allotment of the new shares.
Proceeds will boost the company's capital base and will be used to fund its future expansion plans in Singapore, Sheng Siong said.
Of the gross proceeds of $80.4 million, between 98 per cent and 99 per cent will be used to finance the expansion, while the rest of the gross proceeds will be used to pay the fees incurred from the placement exercise.
Expansion plans include the acquisition of properties for new retail outlets in areas deemed to present viable business prospects.
The money will give it a sizeable war chest to explore potential new markets in Singapore, in line with its strategy of selectively acquiring retail space in strategic locations.
Sheng Siong said this strategy will complement its historical strategy of leasing new retail outlets, helping to position itself more favourably for growth.
The company announced last month that it had entered into a non-binding deal for a proposed joint venture with Kunming Luchen Group to operate supermarkets in China.
It also announced in June that it has been granted an option to buy a three-storey Housing Board commercial property at Block 506, Tampines Central 1, to set up shop in the mature estate.
This article was first published on September 05, 2014.
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