Published June 24, 2009

PSL proposes one for two rights issue

It will issue up to 68.75m new ordinary shares at two cents each

By JOANNE TANG

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PSL Holdings Limited - a specialist engineering company offering ground engineering services, equipment rental and hardware supply - has proposed a renounceable non-underwritten rights issue to improve the liquidity of the company's shares.

The company will issue up to 68.75 million new ordinary shares at an issue price of two cents each on the basis of one rights share for every two existing ordinary shares in the capital of the company. PSL shares last traded at 18 cents each.

Based on the issued share capital of 137.5 million shares as at yesterday, the issue of up to 68.75 million represents up to about 50 per cent of the company's issued share capital.

Assuming that the rights issue is fully subscribed, PSL will raise a net proceed of $1.22 million, which it intends to use for the acquisition of equipment and for general working capital requirements.

The purpose of the rights issue is to enlarge the share capital of the company and to enhance the liquidity of the shares, as well as to reward shareholders following the company's successful transfer from Catalist to the SGX main board, said PSL.

PSL had a six-month average volume of 0.194 million. Following the announcement of rights issue last Friday, the trading volume surged to 0.468 million on Monday. The volume traded yesterday was 0.103 million.

Currently, the executive chairman, Lee Cheng Peck, and his concert parties, Lee Tian Lye and Susannze Chia Peck Toh, hold about 64.63 per cent of stake in the company. To express support for the rights issue, they have irrevocably undertaken to take up their direct entitlements under the rights issue. Further, the two Lees have undertaken to take up to five million rights shares each in excess of their respective entitlements, in the event that the rights issue is not fully subscribed.

The rights issue needs the approval-in-principle of the Singapore Exchange.