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HONG KONG - Skyline Builders Group Holding Limited (NASDAQ:SKBL), a Hong Kong-based civil engineering services provider with a market capitalization of $14.69 million, announced Wednesday it has entered into a definitive securities purchase agreement with accredited investors for a private placement expected to raise approximately $17.8 million. According to InvestingPro data, the company’s stock has experienced significant volatility, having declined over 88% year-to-date.
The private placement includes the issuance of up to 24,349,315 Class A Ordinary Shares priced at $0.73 per share, along with prefunded warrants and two types of purchase warrants. The A Warrants will allow holders to purchase shares at $0.60 each, while B Warrants carry an exercise price of $0.65 per share. Both warrant types will be exercisable for five years following the closing. InvestingPro analysis reveals the company operates with a concerning debt-to-equity ratio of 1.42 and has been rapidly burning through cash, with negative free cash flow of $4.79 million in the last twelve months.
According to the company’s statement, approximately $7 million of the proceeds will be used to retire 18.5 million Class A Ordinary Shares owned by Supreme Development (BVI) Holdings Limited, a company beneficially owned by CEO Ngo Chiu Lam. The remaining funds will be allocated for working capital and general corporate purposes.
Dominari Securities LLC, Revere Securities LLC and Pacific Century Securities are serving as co-placement agents for the offering, which is expected to close August 27, subject to customary conditions.
The securities sold in this private placement have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption. The company has agreed to file a registration statement with the SEC covering the resale of these securities.
Skyline Builders primarily operates as a subcontractor for public civil engineering works in Hong Kong, focusing on road and drainage projects for both public infrastructure and private residential and commercial developments. The company maintains thin gross profit margins of 6.34% and currently shows weak financial health, according to InvestingPro metrics, which offers 10+ additional insights about the company’s financial condition.
In other recent news, Skyline Builders Group Holding Ltd announced its decision to adopt certain Cayman Islands corporate governance exemptions as permitted under Nasdaq rules for foreign private issuers. This move allows the company to bypass several Nasdaq requirements, including shareholder approval for specific securities issuances and equity-based compensation. Additionally, Skyline Builders Group Holding Ltd has unveiled a plan for a 10-for-1 share consolidation, pending shareholder approval at an upcoming extraordinary general meeting. The board has the flexibility to adjust the consolidation ratio, though it must remain at a minimum of two shares into one. These developments highlight the company’s strategic decisions in governance and capital structure.
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