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SINGAPORE - Rectitude Holdings Ltd. (NASDAQ:RECT), a Singapore-based provider of safety equipment and industrial products with annual revenues of $32.6 million and a gross margin of 32.78%, announced Monday it has entered into a Standby Equity Purchase Agreement (SEPA) that will help fund its new Bitcoin treasury strategy. According to InvestingPro analysis, the company currently trades above its Fair Value, with several key metrics suggesting careful consideration for investors.
The agreement with Constantinople Limited, a British Virgin Islands company, gives Rectitude the option to issue up to $32,625,000 of its ordinary shares. The company stated it intends to use most proceeds from any sales under the agreement to purchase Bitcoin, with the remainder allocated for general corporate purposes.
Under the terms of the SEPA, Rectitude will determine the timing and number of shares sold through advance notices to the lead investor. The purchase price will be at a 2.5% discount to the lowest daily volume-weighted average price during three consecutive trading days after delivery of an advance notice.
The company indicated there are no mandatory minimum drawdowns or penalties for not utilizing the full commitment amount. The agreement becomes effective following registration of the ordinary shares with the Securities and Exchange Commission.
"Holding Bitcoin on our balance sheet represents a strategic move to safeguard shareholder value while positioning us for a digital future," said Jian Zhang, Chairman and CEO of Rectitude, in the press release statement. InvestingPro data shows the company maintains healthy financials with a current ratio of 2.26 and a moderate debt-to-equity ratio of 0.35, potentially supporting this strategic initiative. Subscribers can access 6 additional ProTips and comprehensive financial analysis through the platform.
Founded in 1997, Rectitude primarily provides safety equipment including protective clothing, gloves, safety footwear, fall arrest systems, and fire extinguishers. The company markets its products throughout Singapore and Southeast Asia, including Brunei, Cambodia, Malaysia, Indonesia, and Vietnam. The stock has seen a -30.33% YTD return, though it maintains a positive one-year return of 46.3%, according to InvestingPro data.
The company has not established a specific target for Bitcoin holdings and will evaluate market conditions for future purchases, according to the announcement.
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