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PETALING JAYA: Hibiscus Petroleum Bhd
is seeking to raise up to RM2bil, more than double its current market capitalization, from a proposed private placement of convertible exchangeable preferred shares (CRPS) to acquire good value, high quality oil and gas production assets.
In a statement yesterday, the oil and gas exploration and production company said it views the proposed private placement exercise, which involves up to two billion new CRPS at an issue price of RM1, as the most appropriate mechanism for raising. funds, in order to optimize the possibilities of acquiring attractive assets in a timely manner.
The company said those assets include those sold through bidding rounds with tight deadlines for completion.
“Such acquisitions, if they materialize, would likely contribute positively to its earning potential in the near future.
Hibiscus said the net proceeds from the proposed CRPS private placement will be held in an Islamic trust account of a licensed bank and will be managed by an independent custodian.
“Acquisitions must meet specific qualification 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 12% or equivalent.
“The group will prioritize assets with strong production potential along with cost optimization opportunities and remains committed to growing its business in its geographic focus areas, particularly in Southeast Asia.”
The listing of Hibiscus shares will resume tomorrow, after being suspended since 2.30 pm yesterday.
The counter last traded at 56 sen.
Commenting on the proposed private placement exercise, Hibiscus Managing Director Kenneth Pereira said he was excited about the group’s future opportunities.
“The amount of new capital that we are trying to raise is more than double our current market capitalization (of RM 889 thousand) and is almost three times the total amount raised through equity instruments since our inception.
“We are excited about the opportunities we see on the horizon and we are determined to be prepared to address them from an equity and debt perspective,” he said in a statement.
“CIMB Investment Bank Bhd (CIMB) and Hong Leong Investment Bank Bhd (HLIB) have been appointed joint lead advisers for the proposed private placement exercise.
Affin Hwang Investment Bank Bhd, CIMB and HLIB have been appointed to act as the joint book brokers for potential CRPS venues.
Hibiscus said that the proposed placement of CRPS is subject to obtaining various regulatory and shareholder approvals.
“An EGM will be convened for this purpose,” he said, adding that the proposed private placement can be implemented in single or multiple tranches.
“The conversion price for the first tranche of the CRPS has been set at RM0.66, which represents a premium of approximately 10% over the five-day volume-weighted average market price of Hibiscus common shares in Bursa Malaysia. until September 8, 2020 (last market day before the announcement), of 59.72 sen ”.
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