Martin Lee @ Sg
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Rise and Fall of Raffles Education

Raffles Education announced yesterday that they will be doing a rights issue.

170,893,872 Rights Shares at a price of S$0.14 for each Rights Share will be issued in order to raise $23.925 million. 60% of the money will be used for repayment of loans while the rest will be used for working capital and investment into educational institutions.

Raffles Education had earlier reported a loss of $59.3 million for its 2012 fiscal year compared to a net profit of $13.2 million a year earlier.

The current trading price of Raffles Education is around $0.35, so the rights are issued at a substantial discount. In addition, the rights will be renounceable and non-underwritten.

The rights exercise is subject to approval by SGX.

Things have not been looking good for Raffles Education in the past few years. They invested a lot of money into China based Oriental Century, which turned out to have inflated earnings. They also run into some problems with their Vietnam operations as they had their license revoked.

I remember it was quite a popular stocks many years ago. The growth prospects were exciting and the share price kept on going higher and higher.

An initial investment of $10,000 into Raffles Education would have made investors more than 10 times their money, after adjusting for all the stock bonuses. I could only marveled at those who bought in early and managed to hold it all the way.

Alas, all good things have to come to an end and the investors who bought stocks at the peak would have suffered massive losses.

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