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The Edge Markets - Reach Energy Comtemplates Fund-Raising Proposal For QA
Reach Energy contemplates fund-raising proposal for QA
By Sangeetha Amarthalingam / theedgemarkets.com | April 12, 2016 : 11:47 PM MYT
KUALA LUMPUR (April 12): A week after declaring it has sufficient funds to finance the capital expenditure (capex) to be incurred by its qualifying acquisition (QA), Reach Energy Bhd now says it is contemplating a fund-raising proposal for the purpose.
"Although Reach Energy estimated the near-term capex to be low, the company is currently contemplating a fund-raising proposal as mentioned in the company's announcement dated March 5, 2016,” it said in a statement today.
The oil and gas (O&G) special purpose acquisition (SPAC) added that it will make the necessary announcement when there is material development on the fund-raising proposal.
Reach Energy managing director Shahul Hamid Mohd Ismail had said on April 6 that the SPAC has no plans to launch a cash call on investors to fund the capex incurred by its QA in the near term.
He told a news conference that the capex, amounting to about US$15 million from now till 2019, would be funded internally as the company has 'sufficient funds' for the exercise.
In its statement today, Reach Energy said as per its March 5 announcement, the completion of the proposed QA is conditional on the conditions precedent of the agreement entered on the same day.
The conditions include obtaining the decision of the Securities Commission Malaysia and the approval of shareholders of Reach Energy and MIE Holdings Corp (MIEH).
The agreement involves a deal between Reach Energy with Palaeontolol Cooperatief UA (PCUA) and MIEH.
Reach Energy plans to acquire 60% stake in PCUA's wholly-owned unit based in the Netherlands, Palaeontolol BV, for US$154.9 million. Palaeontolol owns the Emir-Oil Fields in Kazakhstan.
PCUA is a wholly-owned subsidiary of Hong Kong-based MIEH.
The purchase consideration is 84% of the RM750 million proceeds of the SPAC raised from its initial public offering.
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