PENANG theme park developer Sim Leisure Group (SLG) made its Catalist debut on the Singapore bourse on Friday, opening at S$0.17 apiece - 22.7 per cent lower than its initial public offering (IPO) price of S$0.22 per share.
As at 10.04am on Friday, the counter was trading at S$0.168 apiece.
SLG on Thursday placed out 26.4 million shares at S$0.22 apiece to raise a total of S$5.81 million. The bulk of its IPO proceeds, or S$5.6 million, will be used to fully redeem outstanding preference shares held by state government entity, Penang Development Corp, the group said.
The IPO placed about one-fifth of the company in public hands, while Sim Leisure Group founder and chief executive Sim Choo Kheng and his spouse Silviya Georgieva will hold a combined 78.4 per cent stake.
In response to a query from The Business Times on Thursday, SLG said it had from the outset prioritised redeeming its outstanding redeemable convertible preference shares held by Penang Development Corp with the IPO proceeds, stating this order of priority in its preliminary prospectus.
"In view that the total gross proceeds is approximately S$5.81 million, the use of proceeds was updated accordingly and none of the gross proceeds from the placement would go towards expansion and working capital purposes," SLG said.
"Nevertheless, the group is confident that this would not have a material adverse impact on its operations and business plans," it added.
Under an investment agreement inked in 2016 to finance one of the group's two parks, Penang Development Corp holds two million preference shares, with a maturity date in June 2021. The investment agreement also gives Penang Development Corp the right to take over all of the group's principal subsidiary, in the event of a payment default or certain other conditions.
The offer document noted that one risk to business is how SLG has previously relied on external financing, such as the Penang Development Corp share issuance, as well as shareholders' loans, to fund its capital expenditure. This led to a negative working capital position as at both Dec 31, 2017 and June 30, 2018, it said.
SLG runs two theme parks in Penang – Escape Adventureplay and Escape Waterplay – with a third set to open in the first half this year. The group also has plans to expand into China and South-east Asia, with Bangkok, Jakarta, Manila and Ho Chi Minh City named as potential sites.
Commenting on the firm's listing, chief executive Mr Sim said: "Today marks another milestone in our quest to revolutionise and disrupt the conventional theme park business model. Listing on the Singapore Exchange (SGX) will increase our visibility, and provide us with the impetus to scale our business model into new markets across the region that are awaiting a new genre of affordable and healthy family entertainment."
Separately, SGX's head of equity capital markets, Mohamed Nasser Ismail said: "In this region, the rise in spending power, tourism as well as infrastructure investments could bode well for the theme and amusement park industry. We look forward to supporting the group as it embarks on new growth milestones in Malaysia, as well as expands into new markets in Asean and China."
SLG has a market cap of about S$30 million.