Synertone proposes rights issue to fund Australian expansion

Synertone Communication Corporation has announced a proposed rights issue to raise gross proceeds of up to HK$121.2 million. The issue, on a basis of two rights shares for every one share held, will be offered at a subscription price of HK$0.135 per rights share, representing a 35.71% discount to the closing price on the last trading day. The company emphasizes that the rights issue will proceed on a non-underwritten basis, with any unsubscribed shares to be placed to independent third parties to provide a compensatory mechanism for non-participating shareholders.

Approximately 74.9% (HK$89.3 million) of the net proceeds will be allocated to expand the control system business and building intelligence business, primarily by relocating production facilities to Australia. This includes HK$61.9 million for leasing a new production plant and setting up production lines, and HK$24.5 million for recruiting personnel. The remaining 25.1% (HK$30.0 million) is designated for general working capital and corporate purposes, addressing anticipated increases in operating expenses.

The directors believe this strategy will reduce concentration risk in China, enhance financial performance, and facilitate long-term growth by leveraging existing product knowledge and industry experience in new geographical markets. The move aims to develop products meeting international standards for distribution in Western markets, with Australia as the initial target.