RH PETROGAS LIMITED (Registration Number: Z)

Transcription

1 RH PETROGAS LIMITED (Registration Number: Z) 1. THE PROPOSED CONVERSION OF THE OUTSTANDING DEBTS AMOUNTING TO AN AGGREGATE OF US$61,531,637 OWING TO RH CAPITAL LIMITED, SHARPTONE INVESTMENTS LIMITED AND SURREYVILLE PTE LTD BY THE COMPANY INTO 157,455,957 NEW ORDINARY SHARES ( SHARES ) IN THE CAPITAL OF THE COMPANY ( DEBT CONVERSION SHARES ) AT THE ISSUE PRICE OF S$0.492 FOR EACH DEBT CONVERSION SHARE (THE PROPOSED DEBT CONVERSION ); AND 2. THE PROPOSED ALLOTMENT AND ISSUE OF UP TO 262,292,000 SHARES ( PLACEMENT SHARES ) WITH UP TO 87,431,000 WARRANTS ( PLACEMENT WARRANTS ) AT SUCH ISSUE PRICE TO BE DETERMINED BY THE BOARD AT ITS DISCRETION WHICH SHALL NOT BE LESS THAN S$0.360 FOR EACH SHARE ( ISSUE PRICE ) (THE PROPOSED PLACEMENT ). 1. The Proposed Debt Conversion Introduction The Board of Directors ( Directors ) of RH Petrogas Limited (the Company ) wishes to announce that the Company has on 22 May 2012, entered into a conditional debt conversion deed ( Debt Conversion Deed ) with RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd, pursuant to which the Company will issue an aggregate of 157,455,957 Debt Conversion Shares (fractional entitlements disregarded) to RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd as full and final satisfaction of an aggregate sum of US$61,531,637 (converted at the rate of US$1.00 : S$1.259, which is the average mid-price of the interbank exchange rates of US$ against S$ as published in the Business Times taken over a period of 5 market days (being 11, 14, 15, 16 and 17 May 2012), being outstanding debts owing to RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd by the Company ( Outstanding Debts ) at the conversion price of S$0.492 for each Debt Conversion Share. The conversion price of the Debt Conversion Shares is based on the volume weighted average price of the Shares for trades done on the SGX-ST over a period of one month up to and including 18 May 2012, where available. The Debt Conversion Shares will be credited as fully paid-up and when allotted and issued will rank, pari passu, in all respects with the then existing Shares for any dividends, rights, allotments or other distributions, the Record Date for which falls on or after the date of issue of the Debt Conversion Shares. Condition Precedent Completion of the Proposed Debt Conversion is conditional upon, inter alia, the fulfilment of the following conditions precedent: (i) approval-in-principle for the listing and quotation of the Debt Conversion Shares on the SGX- ST and, where such approval is subject to conditions, such conditions being acceptable to the Company and, to the extent that any conditions for the listing and quotation of the Debt Conversion Shares on the SGX-ST are required to be fulfilled on or before the completion date for the Proposed Debt Conversion, they are so fulfilled; and (ii) the approval of the shareholders of the Company ( Shareholders ) being obtained in respect of the Proposed Debt Conversion. 1

2 Rationale The Proposed Debt Conversion is to facilitate the Company to raise capital for the repayment of the Outstanding Debts through the conversion of debt to equity. As announced on 18 August 2008, pursuant to a sale and purchase agreement for the acquisition of Kingworld Resources Limited by the Company, the balance of the purchase price, being S$10.0 million, as at the Latest Practicable Date, remains owing by the Company to Sharptone Investments Limited. As announced on 27 December 2010, and further updated on 23 April 2012, the Company had obtained a loan from RH Capital Limited for the sum of up to US$50.0 million to fund the acquisition of the entire issued and paid-up share capital of Petrogas (Basin) Ltd, Petrogas (Island) Ltd, RHP Salawati Basin BV and RHP Salawati Island BV. Further, from time to time, the Company received interest-free loans extended by Surreyville Pte Ltd to fund the working capital requirements of the Company. As at the Latest Practicable Date, the amount owing by the Company to Surreyville Pte Ltd was S$4.52 million. The issuance of the Debt Conversion Shares to RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd will effect a full and final settlement of all the Company s obligations on the Outstanding Debts. This will significantly reduce the immediate debt burden of the Group without adversely affecting its operating cash flow. Further, this will significantly strengthen the Group s balance sheet and free up debt capacity for future projects and improve its gearing ratio. Based on the latest audited consolidated financial statements of the Company for the financial year ended 31 December 2011 and assuming the maximum number of Placement Shares are allotted and issued at the Minimum Issue Price (as defined below), the maximum number of Placement Warrants are issued and fully exercised at the Assumed Exercise Price (as defined below) and the Debt Conversion Shares are allotted and issued at the conversion price, the gearing ratio of the Group will improve from 104% to 20% and the net asset value per share of the Group will improve from US cents to US cents. With the strengthening of its balance sheet and the improvement in the gearing ratio, the Group will be in a better position to negotiate more favourable financing terms from financial institutions in respect of its existing facilities and any funding requirements which may arise going forward. Each of Sharptone Investments Limited and Surreyville Pte Ltd is a Controlling Shareholder of the Company. Tan Sri Datuk Sir Tiong Hiew King together with the Estate of Tiong Kiu King hold the entire issued share capital of Sharptone Investments Limited. Tan Sri Datuk Sir Tiong Hiew King together with Dato Sri Dr Tiong Ik King hold the entire issued share capital of Woodsville International Limited which is, in turn, the holding company of Surreyville Pte Ltd. RH Capital Limited is a company controlled by Tan Sri Datuk Sir Tiong Hiew King, who is also the Company s Executive Chairman. As at 14 May 2012 (being the latest practicable date), the direct and indirect interest of Tan Sri Datuk Sir Tiong Hiew King in the Company was 69.17% and the free float of the Company was approximately 23%. Upon the completion of the Proposed Debt Conversion, Proposed Placement and full exercise of the Placement Warrants, Tan Sri Datuk Sir Tiong Hiew King shall remain the largest single shareholder of the Company and his shareholding interests in the Company (direct and indirect) is expected to remain at above 51% through the Proposed Debt Conversion. By seeking to maintain his level of interest at above 51% in the Company through the Proposed Debt Conversion, Tan Sri Datuk Sir Tiong Hiew King as a Controlling Shareholder wishes to demonstrate his confidence in the growth prospects and plans of the Company and his continuing commitment in supporting the Company as the Company and together with its subsidiaries (the Group ) continues to focus on growth and expansion within the upstream oil and gas sector. Shareholders Approval The allotment and issue of the Debt Conversion Shares require the approval of Shareholders under Section 161 of the Companies Act and Rules 805(1) and 812 of the Listing Manual. 2

3 Rule 812 of the Listing Manual provides that an issue must not be placed to, inter alia, the issuer s directors and substantial shareholders, the immediate family members of the directors and substantial shareholders, and corporations in whose shares the issuer s directors and substantial shareholders have an aggregate interest of at least 10% unless specific shareholders approval is obtained for such placement and the directors and substantial shareholders of the Company abstain from voting on the resolution approving the placement. As discussed above, each of Sharptone Investments Limited and Surreyville Pte Ltd is a Controlling Shareholder of the Company and RH Capital Limited is a company controlled by Tan Sri Datuk Sir Tiong Hiew King, who is also the Company s Executive Chairman. Further, the amount of the Proposed Debt Conversion of US$61,531,637 will exceed 5% of the Company s latest audited net tangible assets as at 31 December As the Proposed Debt Conversion constitutes an interested person transaction under Chapter 9 of the Listing Manual and will exceed 5% of the Company s latest audited net tangible assets, it is subject to the approval of independent shareholders in accordance with Rule 906 of the Listing Manual. The 157,455,957 Debt Conversion Shares will constitute approximately 34.47% of the existing issued share capital of the Company as at the date of this announcement and approximately 25.63% of the enlarged share capital of the Company after completion of the Proposed Debt Conversion. No other interested person transactions were entered into by the Company with the RH Capital Limited, Surreyville Pte Ltd, Sharptone Investments Pte Ltd or any other interested person for the current financial year ending 31 December 2012 up to the Latest Practicable Date. Accordingly, the Company is seeking the approval of Shareholders for the Proposed Debt Conversion at an extraordinary meeting ( EGM ) to be convened. Tan Sri Datuk Sir Tiong Hiew King, Dato Sri Dr Tiong Ik King,Tiong Kiew Chiong,Tiong Chiong Ee, Peter Ng Choong Ng Chong Yu and their associates will abstain from voting on the resolution relating to the Proposed Debt Conversion at the EGM. Audit Committee Statement Pursuant to Rule 921(4)(b), the Audit Committee of the Company, after taking into consideration the rationale and the benefit for the Proposed Debt Conversion, is of the opinion that the Proposed Debt Conversion and the proposed allotment and issue of the Debt Conversion Shares to RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd are on normal commercial terms and are not prejudicial to the interests of the Company and its minority Shareholders. Accordingly, the Company is not required to appoint an independent financial adviser to advise the independent directors as to whether the Proposed Debt Conversion is on normal commercial terms and is not prejudicial to the interests of the Company and its minority Shareholders. Dato Sri Dr Tiong Ik King, a member of the Audit Committee, had abstained from making any recommendations as he is deemed to be interested in the proposed allotment and issue of the Debt Conversion Shares to RH Capital Limited, Sharptone Investments Limited and Surreyville Pte Ltd. 2. The Proposed Placement Structure of the Proposed Placement The Directors also wish to announce that the Company has appointed CLSA Singapore Pte Ltd ( CLSA ) as the Sole Global Coordinator and CLSA and Maybank Kim Eng Securities Pte. Ltd. ( Maybank KES ) as Joint Bookrunners and Joint Placement Agents, for the Proposed Placement. The Proposed Placement will be structured as a package of Shares and warrants comprising up to 262,292,000 Placement Shares with up to 87,431,000 Placement Warrants to be offered by the Company for subscription, so as to raise gross proceeds of approximately S$132.0 million in aggregate based on the minimum issue price of S$0.360 per Placement Share ( Minimum Issue Price ) and the illustrative Exercise Price of S$0.430 for each Warrant Share (as defined herein) ( Assumed Exercise Price ) and assuming that all Placement Warrants will be exercised by Warrant holders. A SGXNET announcement will be posted on the internet at the SGX-ST website 3

4 once the final size and composition of the Proposed Placement is determined following a bookbuilding. The Placement Shares together with the Placement Warrants shall be offered to institutional and other investors by way of bookbuilding. The Joint Bookrunners and Joint Placement Agents will identify the placees, following a bookbuilding process and will advise the Company of these persons. The Issue Price shall be determined after the bookbuilding exercise has been completed, but in any case, shall not be less than the Minimum Issue Price which is based on 20% discount to the volume weighted average price for trades done on the SGX-ST on 16 May The Exercise Price shall also be determined after the bookbuilding exercise has been completed and shall be up to 20% premium to the Issue Price which shall be determined jointly by the Board and the Sole Global Coordinator. The Placement Shares and Warrant Shares (as defined herein), when allotted and issued, will rank pari passu in all respects with the then existing Shares for any dividends, rights, allotments or other distributions, the record date for which falls on or after the date of issue of the Placement Shares and Warrant Shares (as defined herein). The Placement Warrants, when allotted and issued, will entitle the placees to subscribe for one new Share ( Warrant Share ) at the Exercise Price for each Warrant Share which shall be payable upon the exercise of the Placement Warrant. The Placement Warrants shall have an exercise period commencing from the date of issue of the Placement Warrants and expiring at 5.00 p.m. on the date immediately preceding the first anniversary of the date of issue of the Placement Warrants. The Placement Warrants shall be subject to such terms and conditions to be set out in the Deed Poll. Shareholders Approval On 25 April 2012, Shareholders authorised the Directors to issue Shares in the capital of the Company ( Existing Mandate ), subject to certain limits prescribed by the Listing Manual. These limits specify that the number of new Shares and convertible instruments to be issued pursuant to the Existing Mandate shall not exceed, in the case of an issue otherwise than on a pro rata basis (such as a placement), 20% of the number of Shares in issue as at 25 April In addition, Rule 811 of the Listing Manual provides that (i) an issue of shares must not be priced at more than 10% discount to the weighted average price for trades done on the Singapore Exchange Securities Trading Limited ( SGX-ST ) for the full market day on which the placement or subscription agreement is signed. If trading in the issuer s shares is not available for a full market day, the weighted average price must be based on the trades done on the preceding market day up to the time the placement agreement is signed; and (ii) an issue of warrants or the convertibles securities must not be more than 10% discount to the prevailing market price, unless specific Shareholders approval is obtained for the issue of shares, the warrants or other convertible securities. While the Directors will determine the exact structure of the Proposed Placement, including the final number of Placement Shares, final number of Placement Warrants, Issue Price and exercise price for the Placement Warrants ( Exercise Price ), closer to such offering, having regard to, among other things, market conditions at such time, the maximum number of Placement Shares and Placement Warrants to be issued pursuant to the Proposed Placement will exceed the limits under the Existing Mandate and the Issue Price and/or the Exercise Price may exceed the discount permitted under Rule 811 of the Listing Manual described above. Accordingly, the Company is seeking the approval of Shareholders for the Proposed Placement at the EGM. Conditions Precedent The Proposed Placement is subject to, amongst other things, the following conditions being fulfilled:- (a) approval in-principle being received from the SGX-ST for the admission to the Main Board of the SGX-ST and for the dealing in and quotation of the Placement Shares, Placement 4

5 Warrants and Warrant Shares, such approval not being revoked, rescinded or cancelled prior to the completion of the subscription; and (b) the Company having received approval from its Shareholders at the EGM for the Proposed Placement. The Company will be making an application to the SGX-ST for the listing and quotation of the Placement Shares, Placement Warrants and Warrant Shares. The Company will lodge an offer information statement, prepared in accordance with the Sixteenth Schedule of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005, with the Monetary Authority of Singapore pursuant to Section 277 of the Securities and Futures Act, Chapter 289 ( SFA ), after the approval of Shareholders for the Proposed Placement has been obtained at the EGM. Subject to Shareholders approval at the EGM, the Company will be entering into a definitive share placement agreement with the Joint Bookrunners and Joint Placement Agents for the Proposed Placement. Rationale As part of its strategy to acquire oil and gas assets, the Group has been actively evaluating various oil and gas opportunities. With an increased capital base after the Proposed Placement and using a combination of new equity and debt, the Group will be better positioned to pursue such opportunities. The Directors believe that the Proposed Placement will enable the Company to raise capital for the development of the Company s current fields, acquisitions and working capital. The Proposed Placement will enable the Company to be in a better strategic position to consolidate the Company s financial resources to ensure long-term sustainability of the Company as the Group continues to explore more opportunities to strengthen its position in the energy sector. In addition, the Proposed Placement will enable the Company to diversify its shareholding base and give it the opportunity to raise capital from institutional and other investors. After the completion of the Proposed Debt Conversion, the Proposed Placement and full exercise of the Placement Warrants, the free float of the Company is expected to be expanded significantly. With a higher free float, there will be greater participation by investors and broadening of the shareholder base which may increase the trading and liquidity of the Shares. Use of Proceeds Based on the Minimum Issue Price and assuming 262,292,000 Placement Shares are issued, the estimated net proceeds, after deducting expenses of approximately S$5.8 million pertaining to the Proposed Placement, is estimated to be S$88.7 million. The Company intends to apply the net proceeds from the Proposed Placement for the following purposes:- Purpose As a % of net proceeds raised Development of the Group s oil and gas projects 60 to 80 Investments, acquisitions and joint ventures 10 to 30 General working capital 10 As the Placement Warrants are issued as part of the placement package comprising Shares and warrants, there will be no proceeds from the issue of the Placement Warrants. Assuming that the Placement Warrants are fully exercised and Warrant Shares are issued, the net proceeds arising therefrom of S$37.5 million shall be used for investments, acquisitions and joint ventures relating to oil and gas resource projects and general working capital purposes. Pending the specific deployment of funds, the proceeds may be placed as deposits with financial institutions or added to the working capital or used to reduce bank borrowings or used for 5

6 investment in short-term money market instruments as may be determined by the Board in their absolute discretion. The Company will make periodic announcements on the use of proceeds from the Proposed Placement when materially disbursed and to provide a status report on the use of proceeds in its annual report(s). Financial Impact For illustrative purposes only and based on the latest audited consolidated financial statements of the Company for the financial year ended 31 December 2011, assuming the maximum number of Placement Shares are allotted and issued at the Minimum Issue Price and the maximum number of Placement Warrants are issued and fully exercised at the Assumed Exercise Price, the financial effects of the Proposed Debt Conversion and the Proposed Placement on the Company and the Group are set out below. The analysis below has been prepared solely for illustrative purposes and does not purport to be indicative or a projection of the results and financial position of the Company and the Group after completion of the Proposed Debt Conversion and the Proposed Placement. i) Net Asset Value ( NAV ) per Share For illustrative purposes only, the financial effects of the Proposed Debt Conversion and the Proposed Placement on the NAV of the Group, assuming that the Proposed Debt Conversion and the Proposed Placement have been completed at the end of FY2011 are as follows:- NAV per Share (US cents) for FY2011 Before adjusting for the Proposed Debt Conversion (1) After adjusting for the Proposed Debt Conversion (2) After adjusting for the Proposed Debt Conversion and the Proposed Placement (3) After adjusting for the Proposed Debt Conversion, the Proposed Placement and assuming the exercise of all the Placement Warrants (4) Notes:- (1) Computed based on NAV as at 31 December 2011 and the issued share capital of 456,821,443 ordinary shares as at 31 December (2) Computed based on NAV as at 31 December 2011, adjusted for the Proposed Debt Conversion, and the issued share capital of 614,277,400 ordinary shares, after taking into account the issuance of 157,455,957 Debt Conversion Shares. (3) Computed based on NAV as at 31 December 2011, adjusted for the Proposed Debt Conversion and net proceeds from the Placement Shares less estimated fair value of warrant derivative liability at the end of FY2011 as a result of the Placement Warrants, and the issued share capital of 876,569,400 ordinary shares, after taking into account the issuance of 157,455,957 Debt Conversion Shares and 262,292,000 Placement Shares. (4) Computed based on NAV as at 31 December 2011, adjusted for the Proposed Debt Conversion and net proceeds from the Placement Shares and the Warrant Shares, and the issued share capital of 964,000,400 ordinary shares, after taking into account the issuance of 157,455,957 Debt Conversion Shares and 262,292,000 Placement Shares and 87,431,000 Warrant Shares. 6

7 ii) Earnings per Share ( EPS ) For illustrative purposes only, the financial effects of the Proposed Debt Conversion and the Proposed Placement on the EPS of the Group, assuming that the Proposed Debt Conversion and the Proposed Placement have been completed at the beginning of FY2011 are as follows:- Basic EPS (US cents) for FY2011 Diluted EPS (US cents) for FY2011 Before adjusting for the Proposed Debt Conversion (1) After adjusting for the Proposed Debt Conversion (2) After adjusting for the Proposed Debt Conversion and the Proposed Placement (3) After adjusting for the Proposed Debt Conversion, the Proposed Placement and assuming the exercise of all the Placement Warrants (4) Notes: (1) Basic EPS - Computed based on weighted average number of ordinary shares of 456,268,018 as at 31 December 2011, after taking into account the issue of 1,000,000 new ordinary shares in July Diluted EPS - Computed based on weighted average number of ordinary shares of 457,700,643 after taking into account the effects of dilution arising from the share options issued under RHP Share Option Scheme 2011 that are outstanding as of 18 May 2012, which have been assumed to be issued at the beginning of FY2011. (2) Basic EPS - Computed based on weighted average number of ordinary shares of 613,723,975, after taking into account the issue of 1,000,000 new ordinary shares in July 2011 and the issuance of 157,455,957 Debt Conversion Shares. Diluted EPS - Computed based on weighted average number of ordinary shares of 615,156,600, after taking into account the issue of 1,000,000 new ordinary shares in July 2011, the issuance of 157,455,957 Debt Conversion Shares and the effects of dilution arising from the share options issued under RHP Share Option Scheme 2011 that are outstanding as of 18 May 2012, which have been assumed to be issued at the beginning of FY2011. (3) Basic EPS - Computed based on weighted average number of ordinary shares of 876,015,975, after taking into account the issue of 1,000,000 new ordinary shares in July 2011 and the issuance of 157,455,957 Debt Conversion Shares and 262,292,000 Placement Shares. Diluted EPS - Computed based on weighted average number of ordinary shares of 910,355,685, after taking into account the issue of 1,000,000 new ordinary shares in July 2011, the issuance of 157,455,957 Debt Conversion Shares, and 262,292,000 Placement Shares, and the effects of dilution arising from the Placement Warrants and the share options issued under RHP Share Option Scheme 2011 that are outstanding as of 18 May 2012, which have been assumed to be issued at the beginning of FY2011. (4) Basic EPS - Computed based on weighted average number of ordinary shares of 963,446,975, after taking into account the issue of 1,000,000 new ordinary shares in July 2011 and the issuance of 157,455,957 Debt Conversion Shares, 262,292,000 Placement Shares and 87,431,000 Warrant Shares. Diluted EPS - Computed based on weighted average number of ordinary shares of 964,879,600, after taking into account the issue of 1,000,000 new ordinary shares in July 2011, the issuance of 157,455,957 Debt Conversion Shares, 262,292,000 Placement Shares, and 87,431,000 Warrant Shares and the effects of dilution arising from the share options issued under RHP Share Option Scheme 2011 that are outstanding as of 18 May 2012, which have been assumed to be issued at the beginning of FY

8 iii) Gearing For illustrative purposes only, the financial effects of the Proposed Debt Conversion and the Proposed Placement on the gearing of the Group, assuming that the Proposed Debt Conversion and the Proposed Placement have been completed at the end of FY2011 are as follows:- Net Debt (US$ 000) Total Equity (US$ 000) Gearing (1) (times) Before adjusting for the Proposed Debt Conversion 114, , After adjusting for the Proposed Debt Conversion 53, ,320 (2) 0.31 After adjusting for the Proposed Debt Conversion and the Proposed Placement 53, ,223 (3) 0.23 After adjusting for the Proposed Debt Conversion, the Proposed Placement and assuming the exercise of all the Placement Warrants 53, ,541 (4) 0.20 Note: (1) Gearing means the ratio of net debt to equity attributable to the owners of the parent. Net debt means the aggregate amount of liabilities arising from banks and financial institutions, shareholder loans, trade and other payables and other liabilities, less cash and cash equivalents. (2) Computed based on equity attributable to the owners of the Company as at 31 December 2011, adjusted for the Proposed Debt Conversion. (3) Computed based on equity attributable to the owners of the Company as at 31 December 2011, adjusted for the Proposed Debt Conversion and net proceeds from the Placement Shares less estimated fair value of warrant derivative liability at the end of FY2011 as a result of the Placement Warrants. (4) Computed based on equity attributable to the owners of the Company as at 31 December 2011, adjusted for the Proposed Debt Conversion, and net proceeds from the Placement Shares and the Warrant Shares. iv) Share Capital The effects of the Proposed Debt Conversion and the Proposed Placement on the share capital of the Company are as follows:- No. of Shares US$ 000 Existing Issued and paid-up share capital (1) 456,821, ,201 Issue of Debt Conversion Shares pursuant to the Proposed Debt Conversion 157,455,957 61,492 After the Proposed Debt Conversion 614,277, ,693 Issue of the Placement Shares 262,292,000 70,424 Issued and paid-up share capital immediately after the Proposed Debt Conversion and the Proposed Placement Issue of the Warrants Shares assuming the exercise of all Placement Warrants 876,569, ,117 87,431,000 29,837 Enlarged issued and paid-up share capital 964,000, ,954 8

9 Note: (1) Based on the issued share capital of 456,821,443 ordinary shares as at 31 December Interests of Directors and Substantial Shareholders The Placement Shares will not be placed to any of the persons set out as restricted persons under Rule 812 of the Listing Manual of the SGX-ST. None of the Directors or substantial shareholders of the Company or their associates has any interest, direct or indirect, in the Proposed Placement. Circular to Shareholders The Circular relating to the Proposed Debt Conversion and the Proposed Placement including, inter alia, a notice of the EGM and the terms and conditions of the Proposed Debt Conversion and the Proposed Placement will be despatched to Shareholders in due course. BY ORDER OF THE BOARD Tan Sri Datuk Sir Tiong Hiew King Executive Chairman 22 May