Raffles Education jumps 19% on debt conversion; special dividend plan

Shares of Raffles Education surged over 19 per cent on Friday (Oct 31) morning after the company announced a debt conversion plan.

It reached a one-year peak of S$0.081 at 9.02 am, shortly after the market opened. By 9.30 am, the price had calmed to S$0.076.

The investor enthusiasm followed an announcement released through the Singapore Exchange (SGX) on Thursday night that the company plans to convert about S$15.53 million in outstanding debt owed to chairman and chief executive officer Chew Hua Seng into new ordinary shares.

The proposal also includes a special interim dividend of S$0.004 per share for all shareholders.

The proposed debt conversion aims to settle outstanding amounts from unlisted, non-convertible bonds (S$11.75 million) and a loan (S$3.78 million) previously extended by Chew.

The company said the move is part of a broader strategy to “manage its debt obligations, improve its balance sheet, and support its long-term financial sustainability”.

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By converting the debt to equity, the group expects to reduce its overall financial leverage and alleviate repayment obligations, thereby improving its cash-flow position.

The conversion will not raise any new cash proceeds.

A total of about 241.1 million new “conversion shares” will be issued to Chew, representing 17.3 per cent of the company’s existing share capital. These shares will not be eligible for the special dividend.

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The new shares will be issued at S$0.0644 each.

To reward shareholders and “partially offset the dilutive impact” of the conversion, the company plans to issue a special dividend of S$0.004 per share. This dividend is conditional on shareholders approving the debt conversion.

The dividend will also be accompanied by a scrip dividend scheme. To support the company’s cash conservation efforts, Chew and his concert parties have agreed to receive their entire dividend entitlement – estimated at S$2.1 million – in the form of new scrip shares instead of cash.

Chew’s current stake, held with his concert parties, is 37.82 per cent. Following the completion of both transactions, their aggregate shareholding is projected to rise to 47.99 per cent.