Thursday 30 May 2024
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KUALA LUMPUR (June 30): Reach Energy Bhd (REB) will issue 1.03 billion new shares at an issue price of 20 sen apiece to offset debt owing to Super Racer Ltd (SRL) amounting to US$49.56 million (or RM206.51 million).

Following the exercise, SRL will be the largest shareholder of the group, with a stake of 48.5%. SRL intends to seek exemption from taking a mandatory takeover offer of REB’s remaining shares and outstanding warrants, the latter said.

The issuance of the 1.03 billion shares will nearly double REB’s existing share capital of 1.1 billion shares, and would bring its enlarged share capital to 2.13 billion shares.

The exercise will also dilute the REB stake held by Reach Energy managing director Shahul Hamid Mohd Ismail via Reach Energy Holdings Sdn Bhd to 6%, from 11.66%. Meanwhile, MTD Capital Bhd’s stake in the company will be diluted to 5.38%, from 10.45%.

SRL is wholly owned by Hong Kong citizen Cheung Siu Fai, a former head of Asia Pacific of the Strategic Equity Solutions of Merrill Lynch (Asia Pacific) Ltd. Cheung is also the founder of Hammer Capital Group.

The issue price of 20 sen apiece is more than triple REB’s last trading share price of 5.5 sen. REB said the issue price was agreed by SRL “to assist the company” on the debt obligation, and to rationalise REB’s financial position, it said.

Subsequently, REB also intends to enter into a shareholder loan facility agreement with SRL for a loan facility of up to US$5 million (RM22.01 million), mainly for working capital purposes.

SRL’s intention is to invest and “focus on the oil and gas (O&G) industry”, added REB, who has an effective stake of 60% in Khazakhstan-based O&G producer Emir Oil LLP. The proposal will require minority shareholders’ approvals, REB said, with expectations for it to be completed in the second half of 2022.

Emir Oil has oil reserves with book value of RM944 million or 86 sen per REB shares, it said. “REB would require significant funding commitment towards the development of the Emir Oil’s oil reserves before the value of the reserves can be realised,” it added.

REB has been loss-making since its special-purpose acquisition company (SPAC) listing in 2014, with accumulated losses of RM365.84 million. In the first quarter ended March 30, 2022 (1QFY22), REB booked a net profit of RM366,000 on revenue of RM51.22 million, more than double from RM23.06 million the year before.

At its last close of 5.5 sen, REB had a market capitalisation of RM60.3 million.

Edited ByAdam Aziz
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