by SHAZNI ONG / pic by TMR FILE
HIBISCUS Petroleum Bhd plans to raise RM2 billion from a proposed private placement of convertible redeemable preference shares at an issue price of RM1 apiece to acquire good-value, high-quality producing oil and gas (O&G) assets.
It said the proposed private placement is the most appropriate mechanism to raise funds upfront to optimise its chances of acquiring attractive assets, particularly those sold via bidding rounds with tight timelines for completion.
“Such acquisitions, if they materialise, would likely contribute positively to the group’s earnings potential in the near future,” the O&G exploration and production company said in a statement yesterday.
It said it would prioritise assets with strong production potential coupled with cost optimisation opportunities with the target producing assets be located in South-East Asia.
“The acquisition(s) will need to meet specific qualifying criteria endorsed by an independent expert, which include, among others, having a payback period of less than or equivalent to five years and an internal rate of return of more than or equivalent to 12%,” the company said.
Net proceeds from the proposed private placement will be maintained in an Islamic trust account of a licensed bank and managed by an independent custodian.
The proposed placement of up to two billion shares may be implemented in single or multiple tranches.
The conversion price for the first tranche of shares has been fixed at 66 sen, representing a 10% premium over Hibiscus’ five-day volume-weighted average market price of 59.72 sen up to Sept 8, 2020.
“The quantum of new capital that we are attempting to raise is more than double our current market capitalisation and is nearly three times the aggregate amount raised through equity instruments since our inception,” Hibiscus MD Kenneth Pereira (picture) said.
CIMB Investment Bank Bhd and Hong Leong Investment Bank Bhd (HLIB) are the joint principal advisors.
Together with Affin Hwang Investment Bank Bhd, CIMB and HLIB have also been appointed as the joint bookrunners to procure prospective places for the shares.
The proposed placement is subject to regulatory and shareholders’ approvals being obtained. An EGM will be convened for this purpose.
Hibiscus registered a net loss of RM145.2 million in the fourth quarter ended June 30, 2020, versus a net profit of RM24.72 million last year.
This was due to RM196.3 million provisions made for impairment of non-producing O&G assets and the impact of the offtakes deferral. Quarterly revenue plunged 83.3% to RM39.5 million from RM237.07 million previously.
Shares of the O&G firm ended 2.6% or one-and-a-half sen lower at 56 sen at the close of yesterday’s morning trading session, giving it a market value of RM889.41 million.
Trading of the counter, which was suspended in the afternoon session pending the announcement of the private placement, is expected to resume today.