18 May 2016
SET-listed Group Lease Public Company Limited (GL), the pioneer of digital financing in ASEAN, has decided to raise more than 10 billion baht by issuing a large batch of new warrants and convertible debentures in order to finance a major expansion program over the next 2-3 years.
According to a decision by the GL Board on May 17, a total 170 million warrants (GL-W4) will be issued to the company’s shareholders for free at the ratio of 9:1 (9 shares for 1 warrant). The warrants can be exercised at the ratio of 1:1 (one warrant for one new share) at the price of 40 baht within a two-year period.
The Board also decided to issue US$130 million worth of convertible debentures in a private placement for J Trust Asia. Carrying a 5% interest over a five-year maturity, the debentures can be converted into ordinary shares at the conversion price of 40 baht each. J Trust Asia, a subsidiary of J Trust in Japan, subscribed to the first batch of US$30 million convertible debentures in May last year and fully converted them into GL shares at the end of last year.
GL will effectively raise new capital totaling about 6 billion baht if holders of the new warrants decide to exercise to convert all their holdings while the US$130 million convertible debentures will bring in new funds worth more than 4.5 billion baht.
In order to prepare for both the shareholders and J Trust Asia to exercise their rights, the GL Board also decided to raise the company’s registered capital by 285.05 million shares. These decisions will now be tabled before an Extraordinary Shareholders Meeting (EGM) on June 24 for final approval before becoming effective.
“We need the additional funds because we are expanding on all fronts,” stated GL’s Chairman and Chief Executive Officer (CEO) Mitsuji Konoshita.
Mr. Konoshita is particularly bullish on the group’s growth potentials in Cambodia where GL has pioneered the cost-effective digital finance platform which is now being applied to its businesses in other countries in the region. He projected that GL’s portfolio in Cambodia will double from US$44 million at the end of last year to about US$100 million by the end of this year and further double to about US$200 million next year. Therefore, the new funds from the J Trust Asia convertible debentures are expected to be used up in two years.
In Cambodia where US dollar is the main financing currency, GL’s thriving hire-purchase business covering motorcycles, agricultural machineries and solar panels has now expanded to cover financing for small and medium enterprises (SMEs) that supply the GL range of products to GL’s clients.
Meanwhile, the new funds that will be raised from the exercising of GLW-4 – in Thai baht – will be used to finance the expansion of business in Laos which has turned profitable since late last year, the improvement of assets quality in Thailand and also to prepare for expansion into new markets such as Myanmar as well as possible mergers and acquisitions.
GL’s new expansion program is coming after the company has reported a record-high 222.17 million baht net profit in the first quarter this year which more than doubled from the same period last year and represents the sixth consecutive quarterly record-high profits since the last quarter of 2014.
As the company pushes ahead to expand aggressively into the ASEAN region, it has been chosen to be included in the MSCI Global Small Cap Index effective the end of this month.