Friday 29 Mar 2024
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KUALA LUMPUR (March 29): Hong Kong-based Super Racer Ltd (SRL) is to emerge as the new major shareholder of Reach Energy Bhd with a 48.5% stake after the oil and gas (O&G) exploration and production (E&P) company completed its debt settlement exercise.

This came after the listing of 1.03 billion shares in Reach Energy slated for SRL at 20 sen apiece, as part of the company’s debt settlement exercise to settle RM206.51 million or 76% of the debt it owes to SRL.

In a statement, Reach Energy noted that it completed the exemption of SRL and Cheung Siu Fai — SRL's sole director and owner — from their obligation to undertake a mandatory takeover offer for the company’s remaining shares.

“The completion of the proposed debt settlement also marked SRL’s entry into a shareholder loan facility agreement to make available a shareholder loan facility of up to US$5 million or RM22.87 million to the company,” it said, adding that 89.07% or RM20.37 million will be used for working capital.

Besides SRL, Reach Energy’s other substantial shareholder is Reach Energy Holdings Sdn Bhd with 127.8 million shares or a 6% stake following the exercise, from 11.6%.

Commenting on the completion of the corporate exercise, Reach Energy chief executive officer Tan Siew Chaing dubbed it a new beginning for the company, adding that with SRL sharing its vision coupled with the available funding, it will not only be able to ensure sustainable operations but also pursue opportunities and plans to accelerate growth.

“Our first course of action will be to increase our productivity and efficiency, especially our production volume. To achieve this, the drilling of more development wells is high on the agenda in the near term,” Tan said.

“We also intend to install and replace electrical submersible pumps while simultaneously continuing gas injection measures which are crucial to improve reservoir pressure and ultimately increase our production volume,” she added.

Meanwhile, as part of the subscription agreement of the settlement shares, Reach Energy’s board saw a reshuffle with seven resignations and two appointments.

According to bourse filings, Reach Energy executive director Tunku Datuk Nooruddin Tunku Shahabuddin and directors Noor Lily Zuriati Abdullah, Yerlan Issekeshev, Datuk Jasmy Ismail, Berikkazy Seksenbayev, Izlan Izhab and Nik Din Nik Sulaiman departed from the board.

Replacing them are Cheung Hung as non-executive chairman and Chow Hiu Tung as an independent and non-executive director.

In the financial year ended Dec 31, 2022 (FY22), Reach Energy’s net loss widened to RM227.65 million from RM53.11 million on higher operating expenses, despite increased production volume pushing revenue higher to RM169.46 million from RM150.69 million. The group has been loss making on an annual basis since 2014.

Shares in Reach Energy ended half a sen or 10% lower at 4.5 sen, giving the company a market capitalisation of RM44.4 million.

Edited ByAdam Akmal Aziz
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