This article first appeared in The Edge Financial Daily, on January 7, 2016.

KUALA LUMPUR: Hibiscus Petroleum Bhd’s latest placement has diluted the stake held by the son of a prominent businessman in the oil and gas exploration company, resulting in him ceasing to be a substantial shareholder.

This came following the margin call fiasco of another substantial shareholder last November.

In a filing with Bursa Malaysia on Tuesday, Hibiscus said Littleton Holdings Pte Ltd had ceased to be a substantial shareholder since Dec 17, 2015 when its interest in the company was diluted after the issue of new placement shares.

This was even before the completion of Hibiscus’ second tranche of placement shares totalling 12.4 million issued on Dec 21.

Littleton is owned by Hibiscus’ non-independent non-executive director Datuk Roushan Arumugam, the son of businessman Tan Sri A P Arumugam, the executive chairman of diversified conglomerate Sri Inderajaya Sdn Bhd.

Four years ago, The Edge weekly reported that Arumugam had put in a bid together with investment firm Genii Capital to buy Khazanah Nasional Bhd’s 42.7% stake in the then-listed Proton Holdings Bhd.

His son Roushan first surfaced as a substantial shareholder in Hibiscus on July 25, 2014 after Littleton exercised 12 million of Hibiscus’ Warrants-A. With that, Roushan indirectly owned 53.47 million or 6.13% of Hibiscus shares at the time.

On Oct 29, 2015, Roushan’s equity stake was diluted to 5.45% with the same number of Hibiscus shares held in July 2014.

Hibiscus has been undertaking a series of private placements to fund its exploration business and asset acquisitions. Hibiscus’ drilling in its proven oil reserves had yet to bring out commercial oil since graduating from being a special purpose acquisition company (SPAC) in 2012, straining its balance sheet. As at Sept 30, 2015, Hibiscus recorded accumulated losses of RM67.2 million.

Meanwhile, its cash balance stood at RM668,000 as at Sept 30 compared to RM5.9 million as at June 30, 2015.

It had been reported that another former substantial shareholder Datuk Seri Muhammad Syafiq Baljit Abdullah expressed his displeasure with Hibiscus’ performance so far during an extraordinary general meeting in October 2015.

In early November, certain Hibiscus shareholders were hit by margin calls, which forced them to sell their shares to cover the losses, resulting in the counter plummeting by as much as 50% in a day.

Muhammad Syafiq ceased to be a substantial shareholder on Nov 4 after being forced to sell 66.97 million of his Hibiscus shares in the open market, which worked out to more than half of the 114.95 million shares or 11.72% he had on Oct 28.

Hibiscus’ largest shareholder and managing director Dr Kenneth Gerard Pereira did not revert to request for comments at the time of writing.

Yesterday, Hibiscus’ market capitalisation was RM238.3 million, after its shares hit an all-time low of 22 sen apiece.