282 shareholders to get cold shoulder from LifeBrandz' share consolidation

The travel agency firm plans to consolidate 50 existing ordinary shares into one.

The 282 individuals who hold less than 50 shares in travel agency firm LifeBrandz will cease to be shareholders of the company upon completion of its proposed share consolidation, according to their response to Singapore Exchange Securities Trading’s (SGX-ST) queries.

LifeBrandz announced last January of its share consolidation of every 50 existing ordinary shares in the capital of the firm into one ordinary share. It also plans to raise funds through a renounceable non-underwritten rights issue of up to about 305.84 million new ordinary shares on the basis of 25 rights shares for every one consolidated share.

The rights issue is priced at $0.028 apiece, aiming to raise net proceeds of $8.4m.

However, SGX-ST also questioned this, recalling that LifeBrandz has just completed a placement exercise in January 2020 to Capital Square and raised $0.42m net proceeds. The travel agency then assured that the proceeds from its placement exercise has been fully utilised and that the purpose of the rights issue is different from the previous fundraiser.

“Under the placement exercise, the net cash proceeds of $0.42m raised have been used solely to finance the Group's general working capital and to strengthen the Company's financial position. In contrast, apart from strengthening the Group's financial position, the main purpose of the rights issue is to reduce its existing liabilities, and to finance the expansion of the group's F&B business and new distribution business,” the firm stated in the filing.

SGX-ST also asked whether its Board is considering abstaining Bounty Blue’s executive chairman and CEO Saito Hiroyuki from voting at its upcoming extraordinary general meeting (EGM). Bounty Blue holds a 25.36% stake in LifeBrandz.

The firm then stated that there is no need for such an action. “[T]he Board took into consideration other rights issues in the market with similar offsetting arrangements of loans or advances made by controlling shareholders who had given undertakings to subscribe for their pro rata entitlements of rights shares (and excess in certain cases). In each scenario, the controlling shareholder did not have to abstain from voting at the general meeting,” LifeBrandz said.