Reach Energy scraps private placement

PETALING JAYA: Reach Energy Bhd has aborted its private placement exercise due to the current market condition, but will explore other fund raising options.
“Due to the prevailing market conditions, it is challenging for the Company to implement the Placement at an issue price that is in the best interest of the Company and its shareholders,” it told Bursa Malaysia in a filing yesterday.
The private placement was to raise up to RM180 million, mainly to settle the remaining purchase sum of the acquisition of 60% equity interest in Palaeontol BV and 60% of the shareholder loans from MIE Holdings Corp for US$154.9 million (RM638.2 million), which was completed on Nov 25, 2016.
Reach Energy had said the private placement was a contingency plan for funding, as it is difficult for it to go for bank borrowings as a special purpose acquisition company.
The group stressed that the termination will not affect its acquisition given that the group has flexibility to settle the remaining purchase sum, subject to interest being charged in accordance to the terms of the sale and purchase agreement dated March 5, 2016.
As at March 31, 2017, its cash and cash equivalents stood at RM88.99 million.
Reach Energy shares were unchanged at 41 sen yesterday on some 4.38 million shares done, giving it a market capitalisation of RM449.53 million.