Joyas seeks shareholders’ approval to diversify into nickel distribution and trading business

It's seeking to raise $37.1m.

Mainboard-listed Joyas International Holdings is planning to diversify its core business into what is potentially a profitable nickel distribution and trading business.

This will involve the buying of nickel from suppliers in Southeast Asia and the selling of nickel to customers in Hong Kong and China.

To fund the proposed diversification exercise, the Group plans to raise funds through the issuance of warrants and convertible bonds.

Notably, up to 354,670,733 warrants are proposed to be offered on a renounceable non-underwritten basis at an issue price of $0.01 for each warrant, with each warrant carrying one right to subscribe for one new share at an exercise price of $0.10, translating to a premium of 150% to the stock’s last done price of S$0.04 as at 1 December 2014.

The warrants will have an exercise period of 5 years. Assuming the warrants issue is fully subscribed and exercised, the net proceeds will amount to approximately S$37.1 million after the deduction of professional fees and ancillary expenses.

For the convertible bonds issue, each bond will be priced at $0.015 and will be made on a renounceable basis. The bonds in turn will bear a 7% annual coupon rate which will be payable annually till the bond’s maturity in 2020. However, the Group retains the option to opt for an early redemption of the bonds at 103% of the principal amount after 3 years of the date of issue.

Assuming the convertible bonds issue is fully subscribed based on a conversion price of S$0.10 and an issue size of up to S$5.3 million, there will be a total of 53,200,610 new conversion shares, representing approximately 15% of the Group’s existing share capital on a fully diluted basis.

The estimated net proceeds from the bond issuance would amount to approximately S$5.06 million, after deducting professional fees and other related expenses.

In terms of fund usage, the Group plans to deploy 80% of the net proceeds from the collective issuances to business opportunities pertaining to the nickel business, while the remaining 20% will be set aside for general working capital purposes.

The Company will be seeking the approval of shareholders for the proposed diversification as well as the proposed warrants and convertible bonds issues at a Special General Meeting  to be convened on 8 January 2015. A circular has since been despatched to shareholders regarding the matter.