Chesterfield to fund KL site with $21m issue
CHESTERFIELD will invest the proceeds of a rights issue on a hotel and office complex in Kuala Lumpur, according to chief executive Liu Ngai-wing.
The rights issue of 230.8 million new shares to raise $21 million was approved at a special general meeting yesterday.
The Kuala Lumpur development site is one of the major assets of Chesterfield, with a book value of $122 million.
'The company's strategy is to identify a course of action which will enable [it] to benefit from the value of this property without significant further capital commitment,' the company said.
Chesterfield will use about $10 million from the proceeds to pay debt and as working capital.
About $5 million is needed to obtain approval to develop the site. About $2 million will be legal and architect's fees and the remaining $3 million will be used to pay a land exchange premium.
Mr Liu hoped construction could start next year.
The company aims to capitalise on the success of its flour mill in Jiangsu by spending $5 million to buy another mill.
Shareholders will be allotted rights shares at 10 cents each, with warrants for every five existing shares.
The rights price represents a discount of 20 per cent to the stock's close of 12.5 cents on September 22. On March 31, Chesterfield's net tangible assets were about $203.8 million, or 17.7 cents per share.
After the rights issue, net assets will be about $224.8 million, or 16.2 cents per share.
Chesterfield initially planned to use part of the proceeds on its lawsuits against MKI Corp.
Chesterfield had sought damages of about $24.7 million from MKI, but the case was later settled out of court with Sui Chong Holdings, the Winfoong Investment subsidiary which now owns MKI.
Chesterfield was managed up to October last year by MKI Management Services, a subsidiary of MKI.