KUALA LUMPUR (June 5): Well Chip Group Bhd (KL:WELLCHIP) has proposed a rights issue to raise up to RM120 million to fund the opening of new pawnshops and raise cash capital for pawn loans.

The issuance, involving up to 120 million shares, will be made on the basis of one share for every five existing shares held, the pawnbroker and gold retailer said in a bourse filing on Friday.

An illustrative issue price of RM1 per share represents a 23.5% to 30.9% discount to Well Chip’s five-day to the 12-month theoretical ex-price of up to June 3, of RM1.3078 and RM1.4467.

Major shareholder VYN Holdings Sdn Bhd has provided an unconditional undertaking to subscribe to its full entitlement, the exercise's minimum subscription level, at the minimum issue price of RM1 apiece. VYN is the vehicle of Well Chip's parent company, Singapore-listed ValueMax Group Ltd

VYN’s subscription to its entitlement will raise gross proceeds of RM60.8 million. The total proceeds from the exercise will be used to fund six new pawnshops in Melaka and Johor, and raise cash capital for the disbursement of more pawn loans. The remainder will be for the exercise’s estimated expenses.

Well Chip has 27 pawnshops and five jewellery and gold retail shops as at June 3.

VYN owns a 50.7% stake in Well Chip. When coupled with VMM Holdings Sdn Bhd’s 14.81%, ValueMax controls a 65.51% indirect interest in the group.

ValueMax is controlled by Yeah Holdings Pte Ltd, the vehicle of its founder and managing director, Yeah Hiang Nam, and his wife, Tan Hong Yee.

Shares of Well Chip ended one sen or 0.76% lower at RM1.31, valuing the group at RM786 million.