Reach Energy cancels RM180m private placement

By MARK RAO

Reach Energy Bhd has aborted the 305.08 million new share private placement exercise, citing the difficulty to determine a suitable issue price in very challenging market conditions.

“Due to the prevailing market conditions, it is challenging for the company to implement the placement at an issue price that is in the best interest of the company and its shareholders,” the oil and gas (O&G) exploration and production company said in an exchange filing yesterday.

The company will continue to explore other fundraising avenues.

Reach Energy wanted to raise some RM180 million from the private placement exercise and use the proceeds to fund the purchase of its qualifying asset Palaeontol BV and repay an outstanding loan.

The company, however, postponed the issuance to Aug 22 this year after getting the approval from the Securities Commission Malaysia.

The O&G company became the second special-purpose acquisition company in Malaysia when it completed the 60% acquisition of Palaeontol in November last year.

Reach Energy bought the Kazakhstan-based Emir-Oil LLC oilfield from MIE Holdings Corp for US$154.9 million (RM664.5 million).

Reach Energy had wanted to use the proceeds from the private placement to settle the balance from the 60% equity acquisition in Palaeontol and another 60% of the shareholder loans from MIE Holdings.

The company, however, said it has the flexibility to settle the remaining purchase consideration, subject to interest being charged in accordance with the terms of the sale and purchase agreement dated March 5, 2016.

“The termination of the private placement does not have any effect on the acquisition.”

Reach Energy’s share price closed flat at 41 sen yesterday, hovering at a two-year low with 4.38 million shares traded.