SUMATEC (1201) - Sumatec to raise RM400 mil to fund Kazakh projects, ventures into LPG production
KUALA LUMPUR (Feb 17): Oil and gas services provider Sumatec Resources Bhd has announced a slew of corporate proposals related to its projects in Kazakhstan, with plans to raise some RM400 million, including via private placement, share issuance and rights issues with warrants.
Simultaneously, Sumatec also told the local bourse in a statement today, that it has inked an agreement with Ken Makmur Holdings Sdn Bhd and Markmore Energy Labuan Ltd to produce liquefied petroleum gas (LPG) and condensate, as it seeks a new source of income.
Tycoon Tan Sri Halim Saad has a 19.6% stakes in Sumatec, while he wholly-owns Markmore.
Sumatec will implement the corporate proposals in stages, with the cash call proposals via private placement, share issuance, rights issues with warrants to be implemented in the first phase, and LPG production in the second.
The LPG production will only start after the group has completed its cash call exercise.
Sumatec proposes to place one billion new shares, equivalent to 25.9% of its issued and paid-up capital, to third party investors, to raise RM80 million. The bulk of the proceeds will be used as investment funds and general working capital, the company said.
Sumatec intends to price the placement shares at a discount of not more than 10% of the five-day volume weighted average price, calculated up to the price-fixing date.
“Subject to the prevailing market condition, the proposed private placement may be implemented in tranches within six months after the receipt of all relevant approvals,” Sumatec said. “As such, there could potentially be several price fixing dates, depending on the number of tranches and timing of implementation,” the statement added.
As for the share issuance, Sumatec has proposed to issue up to 800 million shares to its contractors, who will be appointed to assist in the Petroleum Operations by providing specialised services, materials and equipment.
“An announcement will be made once the terms of the contractors appointment is finalised,” Sumatec said.
Sumatec will fix the price of the issue shares at a discount of not more than 10% of its five-day weighted average market price or 10 sen, whichever is higher.
“The proposed issuance of shares will allow the company to meet its payment obligations to its contractors for the petroleum operations and its intention is to minimise the impact to its cashflow,” Sumatec said.
On its rights issue with warrants, Sumatec has proposed a renounceable 1-for-2 rights issue of up to 3.23 billion shares, together with up to 3.23 billion warrants at an indicative issue price of 10 sen per rights share, on the basis of one rights share for every two existing shares in Sumatec, held together with one warrants for every one rights share subscribed.
Under the minimum and maximum case scenario, Sumatec said it aims to raise between RM193.3 million and RM322.6 million, respectively, with the bulk of the proceeds to be used to fund for gas development activities, while the remaining balance will be used to repay advances that has been provided by Markmore.
As at Dec 31, 2016, Markmore has provided Sumatec financial advances of around US$18 million, equivalent to RM81.5 million.
Meanwhile, under a maximum scenario of the rights issue with warrants, Halim’s stake in Sumatec is expected to be diluted to 15.4%, from 19.6% currently.
As for its proposal to produce LPG, Sumatec said it intends to produce LPG from the 100 million standard cubic feet per day of natural gas supplied from the Rakushechnoye oil and gas field in Kazakhstan.
Sumatec foresees the Kazakhstan field projects to generate an overall return, measured by internal rate of return, of 20% per year.
Sumatec shares closed 5 sen or 6.25% higher at 8.5 sen today, giving it a market capitalisation of RM328.62 million. Based on the price, Halim’s 804.03 million stake in the company is worth some RM68.34 million.
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| SUMATEC (1201) Sumatec Resources Bhd |
SUMATEC (1201) - Sumatec to raise RM400 mil to fund Kazakh projects, ventures into LPG production
http://www.theedgemarkets.com/my/article/sumatec-raise-rm400-mil-fund-kazakh-projects-ventures-lpg-production
