Challenger's $4.4m rights-cum-warrants issue

IT RETAILER Challenger Technologies is offering shareholders a right-shares-cum-warrants issue that could raise up to $4.4 million for the company.

Challenger announced yesterday that it is proposing a renounceable non-underwritten rights issue - which would see each shareholder getting three rights shares and two free detachable warrants, for every ten shares they hold in the company.

The rights shares will give shareholders the right to subscribe for new shares in the company at 10 cents apiece. Each warrant will also give shareholders the right to subscribe for one new share in the company at 10 cents each.

The proposal will see the company issuing up to 46.05 million new shares, with up to 30.7 million detachable warrants. Should all the warrants be exercised, Challenger would land up issuing a total of 76.75 million new shares - which would represent about half of its existing share capital.

The company said yesterday that, after deducting estimated expenses of about $200,000, the rights issue would raise net proceeds of some $4.4 million.

Challenger intends to use about $900,000 of the proceeds for the expansion of its operations in Singapore and 'towards any opportunities for the expansion of its operations overseas'. It will use the remaining $3.5 million for its working capital needs.

The company also announced that its CEO Loo Leong Thye and his wife Ong Sock Hwee, who collectively own about 52.5 per cent of the company, have given their irrevocable undertaking to subscribe for their entitled rights shares. They have also agreed to take up the remaining specified rights shares and warrants that remain unsubscribed at the closing date of the rights issue.

Challenger will be making the rights issue under the share issue mandate approved by its shareholders in April. The proposed issue is subject to the in-principle approval of the Singapore Exchange.

Challenger also announced yesterday that the net proceeds of $6.3 million it received from its initial public offer in January 2004 have been used for their intended purposes.