KUALA LUMPUR: Reach Energy Bhd
has decided to scrap a proposed private placement to raise up to RM180mil in view of “the prevailing market conditions.”
In a filing with Bursa Malaysia, the oil and gas exploration and production firm said due to these conditions, it was “challenging for the company to implement the placement at an issue price that is in the best interest of the company and its shareholders.”
“Nevertheless, the company will continue to explore other avenues of fundraising and make the necessary announcements in due course,” it added.
When the placement was proposed on May 23 last year, Reach Energy had given the indicative issue price as 59 sen per share.
Its share price, which ended at 69 sen on that day, has since fallen by 41% to 41 sen at Wednesday’s close.
Reach Energy noted that the proceeds from the proposed placement were earmarked mainly to settle the remaining purchase consideration of the acquisition of 60% equity interest in Palaeontol BV (whose unit holds the contracts to explore and produce oil and gas in an 850.3 sq km onshore block in southwestern Kazakhstan) and 60% of the shareholder loans from Palaeontol BV’s parent MIE Holdings Corp.
The proposed acquisition was completed on Nov 25, 2016.
“The company has the flexibility to settle the remaining purchase consideration, subject to interest being charged in accordance to the terms of the sale and purchase agreement dated March 5, 2016, as disclosed in the circular to shareholders of Reach Energy dated Oct 13, 2016. As such, the termination of the placement does not have any effect on the acquisition,” Reach Energy said.
The company previously said it intended to pay the balance payment within 24 months of the date of the acquisition’s completion (no interest will be charged if made within 12 months and 10% interest will be imposed from the 13th to 24th month).
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