PETALING JAYA: Hibiscus Petroleum Bhd, which has requested for a suspension of its stock pending an announcement, is to buy a stake in an oilfield concession priced between US$50mil (RM150mil) and US$70mil (RM210mil), said a source.
The company, which is the first listed Special Purpose Acquisition Company (SPAC) in Malaysia, is expected to make an announcement today.
Located outside of Malaysia, this oilfield is said to come with a concessionary lifespan of some 20 years and would be providing recurring income to the company starting from its financial year ending March 31, 2013.
The source said that six months ago, Hibiscus would not have been able to afford such a concession because the oil and gas market was still relatively buoyant and assets were priced at a premium.
The scenario has changed since Hibiscus' listing. The debt situation in Europe and the United States has deteriorated.
In the last six months, the exploration and production market has been increasingly depressed.
Prices of assets have been dropping quite significantly.
It is believed that Hibiscus' partner in this proposed deal is a foreign exploration and production company.
Some commentators had expressed scepticism over Hibiscus' proposition prior to its listing on the Main Market of Bursa Malaysia in July.
Some felt the firm was leveraging on industry heavyweights such as its managing director and founder Dr Kenneth Pereira who was previously the chief operating officer of Sapura Crest Petroleum Bhd; Petronas Carigali Sdn Bhd board member and former Shell Malaysia deputy chairman Zainul Rahim Mohd Zain as its chairman; and Perisai Petroleum Bhd's Zainol Izzet as director.
Hisbiscus is the region's first SPAC and the first independent local oil and gas exploration and production company to be listed here.
Essentially, being a SPAC means that Hibiscus is a shell company with no product, no earnings, no track record nor operations. The company said prior to its listing that it would use the money raised from its IPO to acquire assets to generate earnings.
The idea of the business may have been viewed as risky, especially among risk averse investors. Hibiscus raised RM235mil from its IPO.
Each share had an issue price of 75 sen and came with a free detachable warrant exercisable at 50 sen.
The stock slid 22 sen or 29% during its debut, in line with the sluggish market performance. The stock closed on Friday at 67.5 sen, up one sen on volume of 9.8 million shares.
It is unclear at this juncture what the remaining cash raised from its IPO would be used for after Hibiscus has paid for this oilfield concession.
The company, which is the first listed Special Purpose Acquisition Company (SPAC) in Malaysia, is expected to make an announcement today.
Located outside of Malaysia, this oilfield is said to come with a concessionary lifespan of some 20 years and would be providing recurring income to the company starting from its financial year ending March 31, 2013.
The source said that six months ago, Hibiscus would not have been able to afford such a concession because the oil and gas market was still relatively buoyant and assets were priced at a premium.
The scenario has changed since Hibiscus' listing. The debt situation in Europe and the United States has deteriorated.
In the last six months, the exploration and production market has been increasingly depressed.
Prices of assets have been dropping quite significantly.
It is believed that Hibiscus' partner in this proposed deal is a foreign exploration and production company.
Some commentators had expressed scepticism over Hibiscus' proposition prior to its listing on the Main Market of Bursa Malaysia in July.
Some felt the firm was leveraging on industry heavyweights such as its managing director and founder Dr Kenneth Pereira who was previously the chief operating officer of Sapura Crest Petroleum Bhd; Petronas Carigali Sdn Bhd board member and former Shell Malaysia deputy chairman Zainul Rahim Mohd Zain as its chairman; and Perisai Petroleum Bhd's Zainol Izzet as director.
Hisbiscus is the region's first SPAC and the first independent local oil and gas exploration and production company to be listed here.
Essentially, being a SPAC means that Hibiscus is a shell company with no product, no earnings, no track record nor operations. The company said prior to its listing that it would use the money raised from its IPO to acquire assets to generate earnings.
The idea of the business may have been viewed as risky, especially among risk averse investors. Hibiscus raised RM235mil from its IPO.
Each share had an issue price of 75 sen and came with a free detachable warrant exercisable at 50 sen.
The stock slid 22 sen or 29% during its debut, in line with the sluggish market performance. The stock closed on Friday at 67.5 sen, up one sen on volume of 9.8 million shares.
It is unclear at this juncture what the remaining cash raised from its IPO would be used for after Hibiscus has paid for this oilfield concession.
