Ezion finds a new investor in EDB Investments

EDBI will subscribe for 14.3m new shares.

According to Maybank Kim Eng, Ezion has entered into a proposed share subscription agreement with EDB Investments Pte Ltd (EDBI). EDBI is the corporate investment arm of Singapore's Economic Development Board.

Here’s more from Maybank Kim Eng:

EDBI would subscribe for 14.3m new shares at S$1.3315 per share, 10% discount to VWAP of S$1.4794 on 14 Dec. Net proceeds raised would be about S$18.9m, in which the majority would be used for 'acquisition of offshore and marine assets' while the rest would be used for general working capital purposes.

The new shares would lead to a dilution of about 1.6%.Tag-along rights. CEO Mr Chew Thiam Keng would also grant EDBI 'Tag-along rights', in which the latter will be able to dispose of its subscription share on a one-for-one basis if Mr Chew disposes his shares through a off-market transaction. The rights will take effect in the event that Mr Chew's shareholding falls below 150m shares (as adjusted for share splits, combinations, recapitalisation, share dividends etc). Mr Chew currently holds about 158m shares (17.6% of enlarged share capital).

Normally, Ezion would secure any required financing prior to announcement of any new contract wins. In this share subscription announcement, 70-90% of the raised proceeds would be used for 'acquisition of offshore and marine asset'. We think that this could implythat there would more contracts in the pipeline. The amount raised is not significant and would probably be sufficient for one unit of a typical refurbish service rig contract of USD80-90m in value. For such contracts, its cost would be about USD60m where it would need to put in 25-30% equity while the rest would come from project financing.

Lastly, the deal is also a symbolic demonstration of EDB’s confidence in Ezion’s business and prospect. Maintain BUY, TP under review.