PNB agrees to take up allotment in UMW-OG rights issue

By MARK RAO

Permodalan Nasional Bhd (PNB) will take up its full allotment for UMW Oil & Gas Corp Bhd’s (UMW-OG) proposed RM1.8 billion rights issue, after issuing an undertaking and subscription letter last week.

Following UMW-OG’s aborted consolidation with Ekuiti Nasional Bhd’s assets early last month, the drilling and oilfield service provider undertook a rights issue of up to 6.05 billion new ordinary shares at an issue price of 30 sen each on the basis of 14 rights shares for every five ordinary shares in the company.

The recapitalisation exercise includes up to 1.51 billion free detachable warrants on the basis of one warrant for every four rights shares subscribed, with PNB to take up a stake not exceeding 65%.

Malaysia’s largest fund manager has since issued an undertaking and subscription letter, pledging to subscribe in full for its entitlement under the proposed rights issue with warrants, while also applying for all remaining rights shares not taken up by other entitled shareholders of UMW-OG via excess rights shares applications.

NB shall additionally subscribe for up to 4.84 billion new Islamic redeemable convertible preference shares, together with up to 1.2 billion free warrants at the 30 sen issue price, to ensure that UMW-OG shall be able to raise the intended gross proceeds of RM1.8 billion,” UWM-OG said in an exchange filing last Friday.

The cash-strapped oil and gas company had accepted PNB’s letter on the same day.

The company’s rights issue undertaking expires at the end of this year and is subject to both shareholders and Bursa Malaysia Securities Bhd’s approval.

The majority or 83% of the RM1.8 billion in proceeds from the proposed issuance will go towards paring down bank borrowings.

UMW-OG started the fiscal year poorly with its net loss widen by 60% to RM104.12 million for its first quarter ended

March 31 this year, compared to the RM65.08 million net loss registered in the corresponding period last year.

The higher loss incurred for the period by the company was largely due to lower time charter rates and reduced foreign-exchange gains for the quarter under review.

The company’s share price closed at 51.5 sen last Friday, down by one sen and with 520,100 shares exchanging hands.