SINGAPORE - KrisEnergy is proposing to raise up to S$140 million via a preferential offering, the struggling oil ad gas producer said in filing with the Singapore Exchange on Thursday (Nov 3).
The offer is for up to S$140 million in senior secured zero coupon notes due 2024, with up to 1.25 billion free detachable warrants. Each warrant will carry the right to subscribe for one new share in KrisEnergy share at an exercise price of 11 Singapore cents per share.
In a separate filing on Thursday, Keppel Corporation said it will participate in KrisEnergy's offering. Keppel holds 40 per cent of KrisEnergy shares through its wholly-owned indirect subsidiary, Devan International Ltd. Keppel said it will transfer these KrisEnergy shares to another unit, Keppel Oil and Gas (KOG).
Keppel said KOG is in discussions with KrisEnergy to provide an irrevocable undertaking it will subscribe and pay for, or procure that Devan subscribes and pays for, its full entitlement of notes with warrants under the preferential offering.
It will also subscribe and pay for, or procure that Devan subscribes and pays for, all the excess notes with warrants that are not successfully subscribed for.
The preferential offering is subject to waivers, consents and approvals being obtained from the Securities Industry Council of Singapore, SGX and the shareholders of KrisEnergy.
It is also subject to KrisEnergy noteholders approving measures the company proposed on Thursday to restructure its debt: the exchange of outstanding S$130.0 million 6.25 per cent. notes due 2017 and S$200.0 million 5.75 per cent notes due 2018 for new notes.
Keppel said KrisEnergy's independent shareholders must also approve by a resolution to waive their rights to receive a mandatory general offer from the Keppel group and its concert parties, in the event Devan's or KOG's direct interest in KrisEnergy ends up at 67.33 per cent of its enlarged issued share capital under the preferential offering.
Explaining its rationale for the move, Keppel Corp said that it remains confident of KrisEnergy's long-term fundamentals and believes the company will continue to extract quality returns on its investment.
"There is considerable value in KrisEnergy's near-term production developments in Thailand, Indonesia and Cambodia, which have limited exploration risks but require capital to generate future cash flows.
"The preferential offering will enable KrisEnergy to ride out near-term funding challenges and create long-term value," said Keppel.
Keppel said it is also in discussions to establish its unit, Keppel Offshore & Marine Ltd, as "preferred partner" of KrisEnergy, supplying it with offshore and marine solutions.
"As KrisEnergy will be ramping up its development activities, especially in Thailand and Cambodia, it will require production solutions and such engagement with KrisEnergy is in line with Keppel Offshore & Marine Ltd's plans to work with oil and gas companies on developments in Asia," said Keppel.