Addvalue's private placements issued at lower than market price prompts shareholders' queries

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MAINBOARD-listed Addvalue Technologies is in favour of raising funds through private placements given that it is faster and more certain than a rights issue unde the current 'challenging capital market conditions aggravated by the Covid-19 pandemic'. Read more at The Business Times.

Shareholders questioned why the company has struggled to obtain financial institutional backing with a lack of progress on several deals announced involving Tiancheng Hengcheng Technology, Bright Star Tech and Rain Asia Pacific.

In response, Addvalue said that the company is a human-centric rather than an asset-based entity with no significant tangible assets at all and operates globally in a complex satellite-related business sector. In addition, there are developmental demands to be met at the expense of the company's bottom line in the near-term before IP assets can start to generate recurring revenue streams upon their commercialisation. As a result, the company will always face the uphill task in gaining backings from financial institutions, said Addvalue.

This comes as financial institutions tend to appraise their financing and investment decisions based on the strength of the backing of tangible assets and/or sustained profits to be realised within the immediate future. Addvalue also noted that executive directors had not received any pay increment for the past few years. They had in fact volunteered for a pay cut in the financial year ended Mar 31, 2019. The pay cut that was reinstated in FY2020 gave the perception of a pay increment, said Addvalue.BT is now on Telegram!

 

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