Brokers left with Q-Tech shares after issue only 51pc subscribed
Underwriters have been forced to take up almost half of Q-Tech Holdings' $35 million rights issue after only 51.8 per cent of the issue was subscribed.
The balance will be taken up by First Yuanta Brokerage, Tingkong-Rexcapital Securities International, Ever-long Securities and CSC Securities.
Of the issue's proceeds, $20 million will be used to retire part of Q-Tech's $29 million in bank debt and $15 million will be used for working capital.
The electrical-appliance distributor is negotiating with four banks over new credit lines after six banks pulled credit lines totalling $80 million.
Q-Tech vice-chairman So Chee-keung indicated after yesterday's annual meeting that the company might launch another cash call to help diversify its investment base to include infrastructure, securities broking and money lending.
'Based on our financial situation in June and July, if we want to jump out of the trading circle to do other business, we do not rule out such a possibility,' Mr So said.
He said Q-Tech's new management had sufficient experience to handle investments in the local financial market but would have to seek partners for infrastructure investment.
In the six months to December 31, the company made a $51.89 million attributable loss compared to $21.9 million profit in the previous corresponding period.
Turnover fell to $224.23 million in the same period from $414 million, while operating profit dropped to $8.73 million from $26.72 million.
The cash-strapped distributor to mainland wholesalers has seen its business decline severely since it has adopted a cash-on-delivery policy.
Control of Q-Tech changed hands in October.