This signals SRL’s emergence as a major shareholder with 1.03 billion shares, or 48.5% of the enlarged issued share capital.
In a statement today, the company said the completion of the proposed debt settlement also marked SRL’s entry into a shareholder loan facility agreement to make available a facility of up to US$5 million, or RM22.87 million, to Reach Energy.
“Approximately RM20.37 million, or 89% of the total proceeds from the shareholder loan facility, will be used for working capital which encompasses the day-to-day administrative, operational and financing expenditure as well as general corporate purposes,” it said.
CEO Tan Siew Chaing said the corporate exercise represents a “new beginning” for Reach Energy. With the available funding, sustainable operations will be ensured. It will also be able to pursue opportunities and plans that will accelerate growth.
“Our first course of action will be to increase our productivity and efficiency, especially our production volume and to achieve this, the drilling of more development wells is high on the agenda in the near term,” she said.
Tan said the company also intends to instal and replace electrical submersible pumps while simultaneously continuing gas injection measures which are crucial to improve reservoir pressure, and ultimately increase production volume.
She said the group would improve its profitability by addressing a price differential issue that it has been encountering.
”On this note, we intend to explore new routes to enable Emir-Oil to export its oil at a price close to the international oil price. We have identified several alternative export routes and we are in the midst of negotiating the terms with several potential buyers,” she added.
As part of the subscription agreement of the settlement shares, Reach Energy’s board saw a reshuffle with seven resignations and two appointments.
According to its Bursa Malaysia filings, Reach Energy executive director Tunku Nooruddin Tunku Shahabuddin and directors Noor Lily Zuriati Abdullah, Yerlan Issekeshev, Jasmy Ismail, Berikkazy Seksenbayev, Izlan Izhab and Nik Din Nik Sulaiman departed from the board.
Replacing them are Cheung Hung as non-executive chairman and Chow Hiu Tung as an independent and non-executive director.
In the financial year ended Dec 31, 2022 (FY22), Reach Energy’s net loss widened to RM227.65 million from RM53.11 million on higher operating expenses, despite increased production volume pushing revenue higher to RM169.46 million from RM150.69 million.
The counter ended half-a-sen or 10% lower at 4.5 sen, giving the group a market capitalisation of RM44.4 million.