Hubline Bhd's container ship Hub Enzo
KUALA LUMPUR: Hubline Bhd
has proposed another fund-raising corporate exercise, this time comprising a notes issue that will raise up to RM200mil mainly for repaying borrowings and buying six new shipping vessels.
In a filing with Bursa Malaysia on Monday, the shipping firm proposed to cancel half a sen from the par value of each 1-sen Hubline share and then to consolidate the 589.85 million shares into 11.80 million shares based on 20 half-a-sen shares into one 10-sen share.
Based on the issued and paid-up share capital of Hubline, the proposed par value reduction would give rise to a credit of about RM58.98mil.
Besides the capital restructuring, Hubline also proposed to issue redeemable convertible notes with a total principal amount of up to RM200mil comprising four tranches. With an interest of 1% per annum, they will have a five-year tenure from the closing date of the first subtranche of the Tranche 1 notes.
The company had on Monday inked a conditional subscription agreement with Advance Opportunities Fund I and Advance Capital Partners Asset Management Private Ltd (the discretionary investment manager of subscriber Advance Oppoprtunities) for the proposed notes issue.
Hubline expects the first sub-tranche of the Tranche 1 notes to be issued in the first quarter of 2017.
Of the expected RM200mil gross proceeds from the issue, it will set aside half for partial repayment of borrowings/credit facilities. As at March 31, 2016, the group had total borrowings of RM159.32mil; and a reduction to RM59.32mil will result in an estimated interest savings of RM7.04mil per annum.
About RM70mil, meanwhile, will be for capital expenditures -- the purchase of six new sets of tugs and barges to boost its dry bulk business.
Hubline incurred a group net loss of RM376.75mil for the financial year ended Sept 30, 2015. Last year, the company decided to focus on dry bulk shipping and ceased its container shipping business, which had been loss-making for several years due to intense competition from larger capacity container vessels and decreasing charter rates.
Hubline shares closed unchanged on Monday at 1 sen, with 3.431 million shares traded.
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