KUALA LUMPUR (Sept 9): Hibiscus Petroleum Bhd is raising up to RM2 billion via a private placement as part of its accelerated plans to acquire good-value and high-quality producing assets.

This is in view of the improved oil and gas (O&G) sector as the global economy starts to recover from the crippling effects of the COVID-19, the group said in a bourse filing today.

“The COVID-19 pandemic and low oil price environment initially slowed down mergers and acquisitions activity globally in the first half of the calendar year 2020. However, with the ramp up of economic activity globally, the outlook for the O&G sector is also improving.

“The group has accelerated its asset acquisition plans as the outlook for the O&G market improves. As established exploration and production players, especially those in Europe, assess their portfolios in light of an increasing focus on the renewable energy space, Hibiscus sees acquisition opportunities for good-value and high-quality producing assets,” it added.

According to the group, priority will be given to assets with strong production potential coupled with cost optimisation opportunities.

Hibiscus said it remains committed to growing its business in its areas of geographic focus, particularly in Southeast Asia.

In light of this, the O&G services firm has proposed the issuance of up to two billion units of convertible redeemable preference shares (CRPS) at an issue price of RM1 apiece, which is based on the most common denominator.

The CRPS, it said, may be placed out in single or multiple tranches.

“The conversion price for the first tranche of the CRPS has been fixed at 66 sen, representing a premium of approximately 10% over the five-day volume weighted average mid prices (VWAMP) of Hibiscus shares up to yesterday at 59.72 sen.

“In the event that there are subsequent tranches of CRPS being placed out, the conversion price for the subsequent tranches of CRPS will be fixed at a premium of up to 10% over the five-day VWAMP up to and including the market day immediately before the price-fixing date,” it added.

The CRPS are intended to be placed out to both local and foreign investors to be identified at a later date by way of book-building.

These parties, Hibiscus said, may include a corporation with total net assets exceeding RM10 million based on the last audited accounts, a partnership with total net assets exceeding RM10 million and individuals whose total net personal or joint assets with their spouses exceed RM3 million.

Hibiscus intends to utilise the net proceeds of  RM1.94 billion — after defraying estimated expenses — for a maximum of three O&G asset acquisitions located in Southeast Asia, whether directly or indirectly through entities holding such assets.

For illustrative purposes, it said the effects of the proposed private placement of CRPS will result in the company’s issued share capital to be at 1.59 billion units worth RM764.97 million — assuming full redemption of the entire two billion CRPS — or 4.62 billion units worth RM2.7 billion — assuming full conversion of the CRPS into new Hibiscus shares.

This is based on the issued share capital of the company as at Aug 28, being the latest practicable date.

Shares in Hibiscus were last traded at 56 sen, down 1.5 sen or 2.61% from yesterday, before trading in the counter was temporarily suspended to facilitate the announcement. This gives the group a market capitalisation of RM889.41 million.