Lorenzo International has just signed an agreement to place out shares at a premium -- and what a whopping premium it is at 67%.
The subscriber is Mr Ding Lei, who agreed to subscribe for up to 65.6 m new shares at S$0.035 apiece.
Placement shares are usually sold at a discount to the market price.
|Dec 2016: Share placement @ 3.5 cents. Gross proceeds: S$2.3 m
April 2016: Share placement @ 2.0 cents. Gross proceeds: S$1.2 m
April 2015: Rights issue @ 7 cents. Gross proceeds: S$9.1 m
This is a premium of 67% to the volume weighted average price of S$0.021 for trades done on Lorenzo shares for the full market day on 1 Dec 2016 (being the full market day up to the day a trading halt was called prior to the signing of the subscription agreement.
The placement shares represent 14.92% of the enlarged share capital of Lorenzo (whose market cap currently stands at $8.2 million).
Lorenzo said Mr Ding Lei has more than twenty years of corporate and management experience in finance, real estate, tourism development, iconic cultural development projects and investment management.
He is the founding director of Guangxi Impression Sanjie Liu Cultural Industry Investment Ltd and has also been the Executive Chairman of Bisan Limited (a company listed on the Australian Securities Exchange) since August 2016. (This is not the same Ding Lei, who is the billionaire CEO of NetEase).
Perhaps he believes he is investing in a turnaround story (see: LORENZO: How we aim to turn around)
His is the second placement of Lorenzo shares this year.
The first was in April when two investors, Mr Teo Eng Chong, and Mr Lee Kim Puay, each subscribed for 30 m new shares.
The issue price was S$0.02, a premium of 17.65% to the volume weighted average price of S$0.017 for trades done for the full market day on 8 April 2016 (being the full market day up to the day a trading halt was called prior to the signing of the subscription agreements).
But when it came to raising money from existing shareholders in 2015, Lorenzo sold shares at a discount.
It carried out a rights-cum-warrant issue, pricing the rights shares at S$0.07, or a discount of 25.5% to the closing price of S$0.094 per share.
Unfortunately for subscribers, the share price has since fallen sharply.
Lorenzo has also issued bonus warrants on a 1 warrant for 1 share basis. The exercise price is S$0.12.