KUALA LUMPUR: Maybank Investment Bank Research said Perisai Petroleum Teknologi Bhd’s proposed cash call is a prudent move and inevitable exercise, as cash reserve is paramount in the current downcycle for the oil and gas industry.
“The cash call is inevitable for we estimate Perisai to be net cashflow negative in 2015-2017,” the brokerage said in its report on Thursday.
“A successful fund raising exercise would ease its cash reserve as it continues to be burdened with two off-hire assets (MOPU and E3 vessel) since September 2013,” it explained.
Maybank Research said it remained cautious on Perisai’s operating outlook, with risk seen overriding return.
“We see no immediate re-rating catalyst. Impairing its idle MOPU’s asset is a possibility by end-2015,” it said.
To recap, Perisai’s proposal for a 10% private placement involved the issuance of up to 119.3 million new Perisai shares, to be placed out to prospective third party investors.
The company had until the next AGM (in the second quarter of 2016) to complete this deal.
The issue price had yet to be fixed but Perisai’s plan was to raise up to RM40mil, of which 68% would go towards repayment of bank borrowings and 32% to working capital.
“The proceeds raised from this exercise will mostly go towards the principal and interest payments of its second jack-up rig (Perisai Pacific 102) and MOPU,” Maybank Research said.
“We understand that several investors have been identified and Perisai aims to conclude this deal as soon as possible. We do not rule out further cash calls in the future should the adverse situation (that is, the two assets remaining off-hire beyond 2015) prolongs,” it said.
Maybank Research maintained its “sell” call on Perisai, with an unchanged target price of 22 sen.
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