KrisEnergy launches rights issue to support CAPEX

  • Business & Finance

KrisEnergy Ltd., an independent upstream oil and gas company, has announced an underwritten renounceable rights issue to support the company’s capital expenditure including to grow oil and gas production in existing fields and near-term development projects.

According to KrisEnergy, the rights issue is expected to generate net proceeds of approximately S$165.6 million ($123.1M) from issuing 440,144,838 new shares on the basis of 42 rights shares for every 100 existing shares.

The company says that the rights shares will be issued at S$0.385 each, representing a discount of approximately 13.5% to the closing price of S$0.445 per share on the Singapore Exchange Securities Trading Limited (SGX-ST) as at June 12, 2015 and a discount of approximately 9.9% to the theoretical ex-rights price of S$0.427 per share.

Keppel to subscribe for its full entitlement

In support of KrisEnergy’s ongoing growth plans, Singapore conglomerate Keppel has undertaken to subscribe for its full entitlement, amounting to 137,985,120 rights shares or approximately 31.3% of the rights issue.

Private equity energy specialist First Reserve has also undertaken to subscribe for approximately 43.9% of its entitlement, amounting to 87,298,701 rights shares or approximately 19.8% of the rights issue.

The remaining rights shares, representing approximately 48.8% of the rights issue, have been underwritten by Merrill Lynch (Singapore) Pte. Ltd., the Lead Manager and Underwriter for the rights issue. Keppel will act as sub-underwriter for all such underwritten rights shares. In the event that Keppel is required to sub-underwrite all the sub-underwritten shares, Keppel’s interest in KrisEnergy will not exceed 50.0% after the completion of such sub-underwriting, and KrisEnergy will remain an associated company of Keppel, KrisEnergy explained in the press release.

Keith Cameron, Chief Executive Officer of KrisEnergy, commented: “The Rights Issue will enable us to continue our strategy of near-term growth in reserves, resources and production, and will increase our borrowing capacity for future projects such as in the G6/48 licence in the Gulf of Thailand, where we made a series of oil discoveries in the Rossukon area earlier this year for which we intend to submit a development plan shortly.”

KrisEnergy is developing the Nong Yao and Wassana oil fields in the Gulf of Thailand, both of which are expected to start production in the second half of 2015. The company says it is also targeting to drill two development wells beginning in the fourth quarter of 2015 to increase production in the Bangora gas field, onshore Bangladesh.

Loh Chin Hua, Keppel’s Chief Executive Officer, commented: “We are confident that the experienced team at KrisEnergy will be able to execute their growth strategy, developing their projects and planned programs.”

Shareholder approval needed

According to the press release, KrisEnergy today received approval in-principle from SGX-ST for the rights issue and will convene an extraordinary general meeting (EGM) to seek shareholder approval for the rights issue, amongst other resolutions.

The company notes that the rights issue is targeted to be completed by mid-August 2015, after the convening of the EGM and receipt of applicable approvals from regulatory authorities.

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