Food Empire raises S$42.8 million from placement of 17 million treasury shares

The placement is expected to broaden the company’s investor base and position it for future growth opportunities

Food Empire raised around S$42.8 million in gross proceeds through the placement of 17 million treasury shares at S$2.52 apiece, the company announced on Wednesday (Sep 24).

This brings its issued share capital, excluding treasury shares, from 529.8 million to 546.8 million shares.

In addition to enhancing the trading liquidity of Food Empire shares, the placement is expected to broaden its institutional investor base, position the group to pursue growth opportunities, optimise its balance sheet and reinforce long-term investor confidence.

Through the placement, the company has raised net cash proceeds of around S$41.7 million and monetised treasury shares that it acquired through substantial share buybacks at a net weighted average cost of S$0.90.

Food Empire’s group chief executive and executive director Sudeep Nair said the response the placement received from institutional and strategic investors was “positive” and “sets a new benchmark going forward”.

The placement price represents a premium of 3.27 per cent to the 30-day volume weighted average price (VWAP) of shares of Food Empire.

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Placement shares were priced at a discount of around 5.38 per cent to the VWAP of S$2.6634, based on trades done on the Singapore Exchange on Tuesday, the last trading day before the placement was announced.

Nair noted that a “fair and resilient” share price helps enhances the group’s flexibility in considering shares as a potential tool in future corporate or strategic initiatives.

Food Empire said that it plans to use the net proceeds for working capital purposes.

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On Tuesday, when it announced the placement, the company said the shares would not be offered for sale to any existing company directors or substantial shareholders.

The counter finished Tuesday 0.4 per cent or S$0.01 lower at S$2.66.