KrisEnergy Ltd. has confirmed an underwritten renounceable rights issue to support its capital expenditures, including growing oil and gas production in existing fields and near-term development projects.
The rights issue is expected to generate net proceeds of $123 million (SGD 165.6 million) from issuing 440,144,838 new shares on the basis of 42 rights shares for every 100 existing shares. The rights shares will be issued at $0.286 (SGD 0.385) each, representing a discount of 13.5% to the closing price of $0.3306 (SGD 0.445) per share on the Singapore Exchange Securities Trading Ltd. (SGX-ST) as at June 12 and a discount of 9.9% to the theoretical ex-rights price of $0.3172 (SGD 0.427) per share.
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 31.3% of the rights issue. Private equity energy specialist First Reserve has also undertaken to subscribe for 43.9% of its entitlement, amounting to 87,298,701 rights shares or 19.8% of the rights issue. The remaining rights shares, representing 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% after the completion of such sub-underwriting, and KrisEnergy will remain an associated company of Keppel.
Keith Cameron, CEO 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 license 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 begin production in the second half of 2015. The company 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.
KrisEnergy has 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, among other resolutions. The rights issue is targeted to be completed by mid-August, after the convening of the EGM and receipt of applicable approvals from regulatory authorities.