Complete Property Market Updates of Singapore

June 27, 2008

Evergro to raise $170m through rights issue

Filed under: Developer News,General — Propertymarketupdates @ 3:28 am

EVERGRO Properties, a subsidiary of Keppel Land, plans to raise about $170 million through a renounceable rights issue.

Evergro also intends to carry out a capital reduction exercise to write off accumulated losses of $36.5 million.

The fund-raising involves the offer of 761.8 million new shares on the basis of three rights shares for every two existing shares held.

Evergro, formerly known as Dragon Land, will announce finalised details of the rights issue ‘in due course’, and determine the issue price closer to the launch date.

It expects the issue price ‘to be at a discount of up to 15 per cent to the then-prevailing market price’. Shares of Evergro closed unchanged yesterday at 23.5 cents.

The China-focused property developer expects to receive net proceeds of about $169 million, of which 71 per cent will go towards land acquisition.

Evergro has a landbank of about four million square metres, and is looking to purchase around 10 per cent more land. In particular, the company will focus on land acquisition in Jiangsu for more residential and mixed-use projects.

Further residential developments around a golf course in Tianjin will take up another 11.8 per cent of net proceeds.

The remaining 17.2 per cent will be set aside for working capital needs. According to Evergro’s CEO Goh Toh Sim, the availability of land acquisition opportunities will determine how long proceeds from the rights issue will last.

Jittery stock market conditions have not deterred Evergro from conducting a rights issue. Mr Goh noted that there is strong genuine demand for mid-to-high end homes in China. Also, the stable property market presented a good buying opportunity.

‘For land acquisitions, you will not want to do it when the market overheats,’ he said.

Keppel Land, which holds a 71.37 per cent interest in Evergro, has made an irrevocable undertaking to subscribe for its full entitlement and make excess applications. Hence, all rights shares will be fully taken up.

Evergro also announced plans to reduce its issued share capital by $36.5 million, to write off accumulated losses of the same amount in their entirety.

‘This is to better reflect the financial position and share capital of the company as well as cancel or reduce any issued share capital which has been lost or is unrepresented by available assets,’ said the press release. The exercise will not involve share cancellation.

Source : Business Times – 31 May 2008

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