KUALA LUMPUR (April 25): Reach Energy Bhd (KL:REACH), which made its debut on Bursa Malaysia as the special purpose acquisition company (SPAC) with the largest initial public offering that raised RM750 million in August 2014, is set to be delisted next Tuesday.
This is because the group has decided not to appeal against delisting after Bursa rejected its third request for more time to submit its regularisation plan. Bursa had cited lack of material progress since the last deadline as the reason for rejecting the company's request to extend the submission deadline from April 2 to October 2.
The group was the fourth SPAC that was listed on Bursa, after Hibiscus Petroleum Bhd (KL:HIBISCS), (listed in 2011), CLIQ Energy Bhd (April 2013) and Sona Petroleum Bhd (July 2013). After Reach Energy, Red Sena Bhd (KL:RSENA) made its market debut in December 2015.
Unlike Hibiscus, the other three have already been delisted — all due to failing to complete their mandate of acquiring a qualifying asset (QA) within the stipulated three years. Reach is set to be the fourth, even though it managed to fulfil its SPAC mandate for the QA, as it will be giving up its listing status next week.
"The board of directors of the company wishes to announce, with regret, that all available avenues have been exhausted, the company has decided not to submit an appeal to Bursa Malaysia against the de-listing within the appeal timeframe by April 21, 2025," Reach Energy said in a bourse filing on Thursday.
The group has not had a profitable year since its successful transition from an SPAC to an oil and gas exploration and production company in 2016 after it acquired its QA.
Its QA was in the form of a 60% stake interest in the Emir Oil LLP concession, which spans six oilfields in the southwestern side of Kazakhstan. It bought the stake from Hong Kong-based MIE Holding Corp (MIEH) for US$175.9 million.
After acquiring the asset, it worked on improving production at the concession, but faced setbacks, including sanctions on oil and gas exports imposed on Russia due to the war in Ukraine, which also affected its operations in Kazakhstan.
Its accumulated losses hit RM531.96 million as at end-2023, while its shareholder equity dropped to less than 50% of its share capital, triggering the Practice Note 17 classification for financially-distressed companies — a condition it has to regularise.
Subsequently, there was speculation that the group intended to divest its Emir Oil concession, but the group refuted these rumours.