Reach Energy to raise up to RM180mil via share placement

KUALA LUMPUR: Reach Energy Bhd, which plans to buy a 60% stake in four oil and gas producing fields spanning 45.5 sq km and an exploration area measuring 804.8 sq km in Kazakhstan, has proposed to undertake a private placement to raise up to RM180mil.

The special purpose acquisition company told Bursa Malaysia that the placement of new shares, which will be to third-party investors to be identified, was inteneded to address potential cash shortfall in the event it used the monies in the trust account to repurchase Reach Energy shares held by dissenting shareholders voting against the planned acquisition.

The maximum number of shares to be issued is 305.085 million, representing 22.9% of Reach Energy’s enlarged issued and paid-up share capital under the 25% dissenting shareholders scenario. The actual number of placement shares to be issued would depend upon the final size of the proposed placement and the final issue price.

Reach Energy shares have risen 8.7% since early February. The counter closed unchanged at 69 sen on Monday, with 2.62 million shares changing hands.

Reach Enery uses an indicative issue price of 59 sen per placement share. Of the RM180mil gross proceeds under the 25% dissenting shareholders scenario, it would use RM118.3mil to pay the remaining upfront cash consideration of US$29.5mil (RM120.6mil) for the proposed acquisition.

A total of RM37.7mil would be used for partial payment of the deferred consideration of US$26.5mil (RM108.4mil) being the remaining 15% of the maximum adjusted purchase consideration of US$175.9mil (RM719.1mil) which has no fixed tenure for repayment.