THE year 2016 was an eventful one for special-purpose acquisition companies (SPAC) in the oil and gas (O&G) industry, but CLIQ Energy Bhd stood out from the rest.

Not only did it fumble with its proposed qualifying acquisition (QA), it also missed the three-year deadline to make the QA buy, which came up in April, and made a mess of its liquidation process.

CLIQ was the second SPAC after Hibiscus Petroleum Bhd to list on Bursa Malaysia in April 2013, and it took almost two years to announce a proposed QA in March 2015. It was eyeing a 51% stake in a special purpose vehicle (SPV) that would own and operate two oilfield blocks in Kazakhstan, for US$117.3 million.

The deal was for Phystech Firm LLP to transfer those oilfields to the SPV, which would then seek a listing on the Kazakhstan Stock Exchange before CLIQ acquires the majority stake. CLIQ would pay US$90 million upfront and the balance three years later.

However, the path to complete the transaction was far from smooth. For one, the deal was benchmarked against oil prices in December 2014. By the time it was announced, market prices had fallen 40% below the deal’s benchmark of US$70 a barrel for Urals crude oil.

This eyebrow-raising premium would later prove a snag in obtaining regulatory approval. In response to a Bursa query, CLIQ explained that the benchmark was due to prevailing prices during negotiations and would be reviewed following an independent assessment.

The independent valuer later reported in April 2015 that the initial price tag was fair. However, CLIQ varied the sale and purchase agreement (SPA) twice before submitting an official application to the Securities Commission Malaysia (SC) for the QA on July 31, 2015.

The ringgit’s depreciation did not help matters either. In April 2013, CLIQ raised RM364 million, equivalent to US$120 million at the time. By March 2015, though, the ringgit had declined further and the value had shrunk to roughly US$100 million.

That means CLIQ might not have enough funds to buy the assets — a concern it acknowledged when it announced a proposed rights issue in October 2015. It sought to raise at least RM210 million to offset an expected shortfall due to some shareholders dissenting against the QA.

As December 2015 came with four months left on its clock, CLIQ and the vendor amended the SPA two more times in what may have signalled growing desperation.

In one amendment, CLIQ was allowed to pay upfront whatever amount of cash it had and defer payment on the difference from the previously agreed upfront amount. The other amendment reduced the price tag to US$110 million.

The third and fourth adjustments came after The Edge reported in November 2015 that the SC had requested a revaluation of the transaction price. In response to the report, CLIQ said the independent valuation report needed to be updated as the basis of valuation cannot be more than six months old by the time a QA circular is sent to shareholders.

As a result, CLIQ’s proposed QA was held up. In January 2016, the SC said it could not proceed with the SPAC’s application as some information was lacking. The company was again thwarted when its investment banker, Maybank Investment Bank Bhd, resigned a week later.

It was clear then that the QA was unlikely to be completed before CLIQ’s three-year deadline came up on April 9. However, it refused to concede defeat, creating unnecessary drama for the market and its shareholders, some of whom were anxious to get their money back.

After the regulator rejected the SPAC’s application for a deadline extension, its promoters, Best Oracle Sdn Bhd, took the matter to court, filing for judicial review on the regulator’s decision.

Among others, Best Oracle sought a mandamus order so that the deadline for the QA application to the SC be extended from the original Jan 22. The hearing was set for May 31, which at the time clashed with the date CLIQ was supposed to obtain a court order for its winding-up and appointment of a liquidator.

The High Court rejected Best Oracle’s application. The latter took the matter to the Court of Appeal, but ultimately withdrew its pursuit for a judicial review by early November.

As for the return of shareholder funds, the first distribution was set for Nov 14, some seven months after it officially became the first Malaysian listed shell company to miss its three-year deadline.

Some might say CLIQ was beset by poor luck given the low crude oil price that set in over a year after it was listed. But it should clearly bear some of the blame given the way it handled the QA process, leading to unnecessarily numerous adjustments to its initial agreement.

In the end, the shareholders who had placed their faith and money in the promoters faced unnecessary delay in getting their funds back — no thanks to certain parties who refused to concede failure gracefully.

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