Hibiscus shareholders approve private placement

KUALA LUMPUR: Hibiscus Petroleum Bhd’s shareholders agreed to a proposed private placement at its EGM yesterday, paving the way for much needed funding for the development of its ongoing projects.
However, shareholders that spoke to Sunbiz said, the event was not without incident as one substantial shareholder warned that the potential removal of board members due to the weak performance of the company.
According to minority shareholders, substantial shareholder Datuk Seri Muhammad Syafiq Baljit Abdullah, expressed dissatisfaction at the EGM on the the company’s weak performance.
Filings with the stock exchange show that Syafiq owns a 10.1% stake in Hibiscus Petroleum after disposing of 1.47% equity interest at the end of last month.
The shareholder was concerned over the business prospects of the company, and criticised the management for not delivering good performance despite a capital injection.
The company posted a net loss of RM34.27 million for three months ended June 30, 2015, and an 18-month net loss of RM74.22 million. Its financial year-end has been changed to Dec 31.
Speaking to reporters after its EGM, chairman Zainul Rahim Mohd Zain said he expects the company to start generating positive cash flow by 2016 upon the conclusion of its Anasuria Cluster deal in North Sea, in which it is looking to buy a 50% stake for US$52.5 million (RM219.45 million).
“That will generate revenue and cash positive by 2016, assuming oil price doesn’t drop anymore,” he said, adding that the only revenue it is getting currently comes from the technical services provided to Lime Petroleum, which has not been able to sustain expenses incurred.
Zainul acknowledged that the company has been facing difficulties in getting loans from the bank, resulting in a delay in the development of Australia’s West Seahorse oilfield.
With the private placement, Hibiscus Petroleum is expected to raise RM207.9 million with the issuance of up to 326.9 million placement shares, representing 25% of the enlarged paid-up share capital at an issue price of 63.6 sen per share.
“We’re not trying to burden (existing) shareholders, so we’re looking for new shareholders to invest in the company,” Zainul explained.
Commenting on the company’s performance thus far, he said the management team has done everything within its control.
“The environment in the upstream segment has not been helpful to us and getting funds to support our business is difficult,” he added.
Moving forward, Zainul said the company will be focusing more on revenue generating, producing and development assets.