Sumatec proposes share placement to raise funds for Kazakhstan oil venture

KUALA LUMPUR: Sumatec Resources Bhd has proposed to place out 348.27 million new shares, or 10% of its issued and paid-up share capital, to raise funds to finance its upstream oil and gas (O&G) operations in Kazakhstan.

In a filing with Bursa Malaysia, Sumatec said the company intended to place out the shares to independent third party investors.

Sumatec, which is owned 24.5% by Tan Sri Halim Saad, has yet to fix the price of the private placement shares but said that based on indicative issue price of 15 sen per placement share, the exercise would raise gross proceeds of RM52.24mil. (Sumatec shares closed trading at 16 sen on Friday, up 1 sen.)

“The proposed private placement will enable the company to raise the necessary funds for its capital expenditure at the Rakushechnoye oil and gas field and general working capital without incurring additional interest costs as compared to other means of financing, such as through bank borrowings or the issuance of debt instruments.

“Further, given the current economic climate and the volatility in global oil prices, the board is of the view that it would be prudent for the company to use equity to fund Sumatec’s operations at the Rakushechnoye oil and gas field,” Sumatec said. 

It said the placement proceeds would be used to finance expenses related to drilling of new O&G production wells and enhancement of existing entities.

Sumatec hopes to complete the private placement by end of this year.