Borneo Oil gets Bursa Malaysia nod for rights issue

KUALA LUMPUR: Bursa Malaysia has approved Borneo Oil Bhd’s rights issue with free warrants, enabling it to raise RM223.39mil to expand its gold mining in Peninsular Malaysia. 

Its corporate exercise involves the proposed issuance of 2.37bil rights shares on the basis of six rights shares for every one share held and 1.18bil free warrants C on the basis of one warrant C for every two rights shares held. 

Borneo Oil said on Monday by expanding its gold mining activities, this could raise its net profit to more than 25% in the future.

“With the addition of the gold mining business starting to come to fruition, these positive developments augur well for the company’s financial performance,” said Borneo Oil executive director Raymond Teo. 

The cash call expects to raise RM223.39mil based on the indicative issue price of 10 sen per renounceable rights share.

The indicative issue price of 10 sen per rights share is a discount of about 33% to the theoretical ex-rights price of its shares of 15 sen based on its closing price of 61 sen per share on July 24, 2015. 

Victoria Ltd owns 25.48% and Hap Seng 16.72% of Borneo Oil and both pledged to subscribe for the rights shares.

Hap Seng Insurance and Victoria Ltd’s entitlements would see them, forking out RM37.34mil and RM56.92mil respectively for the rights shares.

Teo said the company aims to be the major player in the gold mining industry domestically and regionally in the long run. 

He added the expansion would strengthen its business to maximise returns for its loyal shareholders.

“Due to prevailing depressed gold prices, this means that we are entering the industry at a most opportune of timing with low entry costs which augurs well for long term sustainability and profitability,” Teo noted.

Sugarbun, Borneo Oil’s fast food chain is expanding rapidly in the local and foreign market, adding 14 new franchised outlets this year. It has 76 franchised outlets in Malaysia and abroad. 
“Together with the continuing improved performance of the fast-food division and others, the group’s operations are expected to grow from strength-to-strength,” Borneo Oil said.

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