Reach Energy EGM adjourned at shareholders’ request
KUALA LUMPUR: The doom and gloom surrounding the oil and gas sector continue to curb investments in the sector as yet another special-purpose acquisition company (SPAC) – Reach Energy Bhd – had its EGM to vote on its qualifying acquisition adjourned, as shareholders asked for more time to “understand the value of the asset”.
In a filing with Bursa Malaysia last Friday, the company said its EGM has been adjourned at the direction of the shareholders to a date no later than Thursday, Nov 10, which is already an extended date for the deal to be sealed.
Reach Energy’s warrants were the most actively traded last Friday, with some 124.6 million warrants changing hands. The warrant closed 23% lower at 5 sen. Reach shares closed unchanged at 71.5 sen.
Asked whether Reach Energy will seek an extension for the deal’s cut-off date, its managing director and CEO Ir Shahul Hamid Mohd Ismail ( pix) said he felt reluctant to do so as the deal has taken quite a long time, noting that negotiations started in October last year.
He remains confident of the deal going through though, saying the company’s shareholders gave a positive response and expressed concern whether the management would put in all efforts to ensure the acquisition was passed.
“Generally, the shareholders felt that it is a good opportunity and they want to support the acquisition, but they just want to be a bit more assured,” Shahul told reporters after the meeting last Friday, which lasted more than two hours.
“They (shareholders) have given us 30 days to come back with the final decision. Some shareholders wanted a bit more time to look at the qualifying acquisition, and I think that is fair.”
Shahul said the circular of the deal was available to the shareholders only on Oct 13 this year, therefore they may not have had enough time to go through it.
However, he said, the company hopes to hold the meeting before the longstop date (cut-off date) under the sale and purchase agreement for the Emir-Oil acquisition, which is Nov 10.
Last March, the SPAC proposed to pay US$154.89 million (RM640.54 million) for a 60% stake in Palaeontol BV, which is the owner of the onshore oil and gas (O&G) field called Emir-Oil LLP in Kazakhstan. The company has until Aug 14, 2017 to complete its qualifying acquisition.
In 2015, Reach Energy analysed over 40 potential targets in several countries, which then were reduced to four that underwent further evaluation and detailed technical, financial and legal assessments.
The company needs the approval of at least 75% of its shareholders for the qualifying acquisition to become a full-fledged exploration and production O&G company.