Sumatec withdraws extension of time plan for Borneo Energy

New high for Dagang NeXchange Bhd

UALA LUMPUR: Sumatec Resources Bhd has withdrawn its application to seek an extension of time up to May 21, 2017 to complete its corporate exercise involving the purchase of Borneo Energy Oil and Gas Ltd.

The oil and gas company had in early 2014 inked a deal to acquire the latter for US$350mil (then RM1.12bil) in cash and shares from the vendors Abu Talib Abdul Rahman and Dr Murat Safin.

However, the purchase plan had been delayed and on Aug 5, 2016 it had submitted an application for nine months up to May 21, 2017 to complete the implementation of the proposals.

In the latest development, Sumatec said the withdrawal of the application for more time was because it was reviewing its funding scheme due to current share price condition.

Another factor was that Sumatec was looking at reducing the cash composition of the purchase price.

It was also negotiating with the vendors to increase their share component under the payment mechanism of the purchase price which is to be issued at a reasonable issue price.

Recall that the purchase of Borneo Energy for US$350mil involved US$250mil for the Buzachi Neft Oilfields with a proved and probable oil reserves of 68.86 million barrels of oil at US$3.63 per barrel of oil; and US$100mil for the ancillary assets.

To fund the purchase, Sumatec had then proposed a renounceable rights issue of up to 2.298 billion new rights shares with up to 2.298 billion free detachable warrants. This would be at an indicative issue price of 40 sen per rights share on the basis of one rights share for every two shares held together with one rights warrants for every one rights shares subscribed.

The exercise included an offer for sale of up to 727.27 million Sumatec shares to be issued to Abu Talib and Sumatec's substantial shareholder Tan Sri Halim Saad.