Chasen

Chasen: Proposed to grant Macquarie Bank (MB) three-year call options to subscribe for a total of 150m shares, to raise between $5m and $20m. The exercise price of each call option shall be equal to 90% of the average of any three consecutive daily VWAP of the shares over the past 30 trading days, round down to the nearest 0.5¢. Based on the estimated range of proceeds to be raised, the agreement implies an expected average exercise price of between 3.3¢ and 13.3¢ for the options. Under the first committed exercise period (Period 1), MB shall exercise such number of call options to provide the company with at least $1m within a period of 22 trading days. Under the second committed exercise period, MB will exercise such number of call options to provide the company with at least $4m within 110 trading days following completion of Period 1. In connection with the above, Low Weng Fatt, a director and substantial shareholder of Chasen, has entered into a securities lending agreement with MB. The proposal is subject to approval by shareholders at an EGM and by SGX. Chasen shares fall 9.6% to $0.16, likely on concern about the potential dilution effects of the call options. Shareholders may also be unable to appreciate the need for management to resort to a complicated corporate action just to raise funds for general working capital.