The proposal will raise chairman Chew Hua Seng&rsquo s stake to nearly 48%

 

[SINGAPORE] Shares of Raffles Education surged over 19 per cent on Friday (Oct 31) morning after the company announced a debt conversion plan.

 

It reached a one-year peak of S$0.081 at 9.02 am, shortly after the market opened. By 9.30 am, the price had calmed to S$0.076.

 

The investor enthusiasm followed an announcement released through the Singapore Exchange on Thursday night that the company plans to convert about S$15.53 million in outstanding debt owed to chairman and chief executive officer Chew Hua Seng into new ordinary shares.

 

The proposal also includes a special interim dividend of S$0.004 per share for all shareholders.

 

The proposed debt conversion aims to settle outstanding amounts from unlisted, non-convertible bonds (S$11.75 million) and a loan (S$3.78 million) previously extended by Chew. 

 

The company said the move is part of a broader strategy to &ldquo manage its debt obligations, improve its balance sheet, and support its long-term financial sustainability&rdquo .

 

By converting the debt to equity, the group expects to reduce its overall financial leverage and alleviate repayment obligations, thereby improving its cash-flow position. 

 

The conversion will not raise any new cash proceeds.

 

A total of about 241.1 million new &ldquo conversion shares&rdquo will be issued to Chew, representing 17.3 per cent of the company&rsquo s existing share capital. These shares will not be eligible for the special dividend.

 

The new shares will be issued at S$0.0644 each.

 

To reward shareholders and &ldquo partially offset the dilutive impact&rdquo of the conversion, the company plans to issue a special dividend of S$0.004 per share. This dividend is conditional on shareholders approving the debt conversion.

 

The dividend will also be accompanied by a scrip dividend scheme. To support the company&rsquo s cash conservation efforts, Chew and his concert parties have agreed to receive their entire dividend entitlement &ndash estimated at S$2.1 million &ndash in the form of new scrip shares instead of cash. 

 

Chew&rsquo s current stake, held with his concert parties, is 37.82 per cent. Following the completion of both transactions, their aggregate shareholding is projected to rise to 47.99 per cent.

 

The move comes just two months after Raffles Education released its H2 results ending June FY2025, which saw the company fall into the red with a net loss of S$3 million. 

 

The company&rsquo s finances have also been under scrutiny. On Oct 14, 2025, the company announced that its independent auditor had flagged a &ldquo material uncertainty related to going concern&rdquo in its report for the FY2025 results. 

 

The auditor highlighted that as at Jun 30 this year, the group&rsquo s current liabilities exceeded its current assets by S$85.8 million.