First Sponsor Group to undertake rights issue for $399.5m

It dropped its initial plan to issue warrants for perpetual capital securities.

First Sponsor Group decided to drop its proposed issuance of warrants which are exercisable into perpetual convertible capital securities after receiving regulatory feedback on its retail suitability. It will instead undertake a rights issue of warrants convertible to company shares for a gross total of $399.5m.

According to an announcement, under the rights issue, for every seven common shares held, shareholders have a right to subscribe to one Series 2 convertible security, comprised of 3.98% perpetual convertible capital securities for $1.30 each, as well as a free detachable warrant (out of 113.75 million in total) for one new share.

First Sponsor also plans to launch a bonus issue of nearly 79.62 million warrants, in which shareholders will get one warrant for every 10 shares.

First Sponsor said it is undertaking the rights issue to provide itself with the financial flexibility to fund its expansion plans. The expected gross value of its proceeds from the issuance of Series 2 convertible securities is $147.9m, whilst the expected net value is at $146.9m.

78.5% of the net proceeds from the Series 2 convertible securities will fund property development projects and/or acquisition of properties (including hotels) held for income, and/or its property financing business.

Meanwhile, the expected gross value of proceeds from the exercise of warrants is $251.4m.

The proposed exercises will be approved by shareholders at the annual general meeting on 24 April.

United Overseas Bank (UOB) has been appointed as the manager of the rights issue.