Maxi-Cash Financial Services Corporation Limited (“Maxi-Cash”) announced on 17 January 2022 that additional notes will be issued pursuant to the tender and exchange offer for its existing MSFSSP 6.350% 22Jul2022 Corp (SGD).
Earlier this month, Maxi-Cash announced a tender and exchange offer for its outstanding 6.35% bonds due in July 2022. Noteholders were given a choice to either - a) tender the notes for cash up to SGD 10m in aggregate principal amount, or, b) offer to exchange any and all outstanding existing notes for the new issue 6.05% notes due 2025 to be issued under their SGD 300m Multicurrency Medium Term Note Programme.
On 14 January 2022, the results of the tender and exchange offer was announced. SGD 7m in aggregate principal amount of the existing 6.35% notes have been offered for sale for cash and purchased by the company while SGD 23.250m in aggregate principal amount of the 6.35% notes was offered for exchange.
Maxi-Cash is seeking to issue additional notes for its 2025 bond. The new issue will be unsubordinated and unsecured and has a tenor of 3 years, maturing on 24 January 2025. The notes will bear a coupon of 6.05% and will be unrated. The use of proceeds from the additional notes will be used for general corporate purposes, including but not limited to, refinancing or repayment of existing borrowings and financing of investments, acquisitions or capital expenditure of the company.
Maxi-Cash operates in the pawnbroking, money lending, retail and trading of jewellery and branded merchandise. It has businesses mainly in Singapore with some operations in Australia, Malaysia, Hong Kong and Ireland. The company is listed on the SGX under the ticker, 5UF. Maxi-Cash is a subsidiary of Aspial Corporation Limited (ticker: A30), an entity listed on the SGX-ST, with its main business in jewellery, property and financial services.
For the 6 months ended 30 June 2021 (“1H21”), revenue at Maxi-Cash increased by 9% year-on-year (“YoY”) to SGD 111.6m. The increase was due to higher revenue from the sale of jewellery and branded merchandise and increase income from pawnbroking business. However, operating expenses increased by SGD 1.9m from higher staff costs and depreciation costs which led to a 19% decrease in profit before tax to SGD 9.8m.
Total borrowings for Maxi-Cash stood at SGD 363.3m for 1H21, an increase of 16.9% from 2H20. This was due to higher interest-bearing loans for newly acquired properties and working capital.
Maxi-Cash had a cash position of SGD 14.1m at 1H21, but a portion of it is used as security for bank borrowings (2020: SGD 5.3m). The group may have used some cash for the tender exercise but liquidity may improve through this bond offering. Its cash and cash equivalents was not able to cover its short-term debt of SGD 230.2m at 1H21. Net debt to equity for the company is high at 239.7% with a heavy reliance on bank borrowings and debt issuance to fund its operations.
The new issue has a price guidance of 6.05% with a tenor of 3 years. Together with its low cash balance and heavy reliance on debt, its gearing ratio may be at an uncomfortable level for investors.
Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) holds a NIL position and the analyst who produced this report holds a NIL position in the abovementioned securities.
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