UMW Oil and Gas proposes cash call to raise RM1.8b

The number of active U.S. oil rigs fell to 332 last week, the least since November 2009, according to Baker Hughes Inc.

KUALA LUMPUR: UMW Oil and Gas Corporation Bhd (UMW-OG) -- whose Ekuiti Nasional Bhd (Ekuinas) initiated consolidation with Icon Offshore Bhd and Orkim Sdn Bhd was cancelled – now plans to make a cash call.

It said on Thursday Permodalan Nasional Bhd (PNB) had indicated its support for the recapitalisation exercise – involving a proposed rights issue with warrants - to raise proceeds of up to RM1.8bil.

The proposed rights issue entails the issuance of up to 6.053 billion rights shares at an issue price of 30 sen per rights share to raise RM1.81bil. The issuance of the rights shares will be together with up to 1.513 billion warrants.
 
This woud be on the basis of 14 rights Shares for every five UMW-OG shares held by the entitled Shareholders on the entitlement date and the warrants shall be issued to the entitled shareholders on the basis of one warrant for every four rights shares subscribed.

“The proposed rights issue with warrants is renounceable in full or in part. Accordingly, the entitled shareholders can subscribe for and/or renounce their entitlements to the rights shares with warrants in full or in part,” it said. 

UMW-OG said PNB had indicated its support for the recapitalisation exercise subject to it agreeing to the subscription terms of the new securities; an exemption for PNB and the funds from the obligation to undertake a mandatory offer and the collective shareholdings should not exceed 65%. 

It said the theoretical ex-rights price (TERP) of UMW-OG shares of 39.5 sen based on the five-day volume weighted average market price (VWAMP) up to and including April 28, 2017 of 66 sen. The rights issue price represents a discount of 24.0% to the TERP. 

The warrants will be attached to the rights shares and be issued free to the entitled shareholders and/or their renouncee(s) who subscribe for the rights shares.

UMW-OG fixed the exercise price of the warrants at 39.5 sen per warrant after taking into consideration the funding requirements of UMW-OG and its subsidiaries and the expected timing of such requirements over the next seven years.  

UMW-OG said UMW Holdings Bhd (UMWH), will be seeking the approval of its shareholders to distribute 1.204 billion UMW-OG shares, being its entire shareholding in UMW-OG, on the basis of 1.03 UMW-OG shares for every share in UMW held at an entitlement date to be determined.

“Assuming PNB and the unit trust funds under its management maintain their direct shareholding in UMWH as at the last practical date until the implementation of the proposed distribution, collectively, 

PNB and the funds will directly hold 983.178 million UMW-OG shares, or 45.5% of the issued share capital of UMW-OG, assuming successful completion of the proposed distribution. Hence, PNB and the funds will subscribe for not less than 45.5% of the rights shares or 2.75 billion rights shares.