Sona ‘confident’ of SC nod

by **Cals** Thu 25 Sep 2014, 01:16

Business & Markets 2014

Written by Yen Ne Foo of theedgemalaysia.com

Wednesday, 24 September 2014 10:21

KUALA LUMPUR: Sona Petroleum Bhd, which claims to have submitted the full proposal on its qualifying acquisition to the Securities Commission Malaysia (SC) last month, is “confident” of securing the regulator’s approval, said managing director Datuk Seri Hadian Hashim.
“We submitted [the proposal] on Aug 29, 2014, and we are now engaging the SC through our advisers. As usual, we need to explain [the proposal] and we are going through the process,” he said.
Hadian, speaking to reporters after a research house luncheon talk yesterday, said Sona’s submission included technical reports and valuation reports by its advisers and independent auditors, as well as all other due diligence reports.
“It (the proposal) is very extensive under the disclosure-based policy. It is the whole works,” added Datuk Maznah Abudul Jalil, the special purpose acquisition vehicle’s chief financial officer.
Sona announced in July that it had wanted to buy a 40% stake in Thailand-based marine oil and gas concessionaire Salamander Energy (Bualuang) Ltd (SEBL), owned by UK-listed Salamander Energy plc (Salamander), for US$281.2 million (RM913.9 million) cash and that it had signed a sale and purchase agreement with Salamander for the acquisition.
Hadian said the deal, which is subject to approvals by regulators and shareholders, should be completed by year-end.
He added that the company will have to go “back to the drawing board” if the SC rejects its application.
“I would like to pre-empt that. We have gone so far to pick out what we consider a good asset. We think we have met the criteria and are involved in managing the business,” he said.
Hadian called the purchase of a stake in SEBL “a good deal”, but there has been speculation that Sona will not have a role in SEBL’s operations.
This is a contention which will likely impact SC’s decision. Under SC guidelines, Sona has to purchase an asset which gives it the right to operate it.
Hadian denied the speculation and said Sona will be involved in all “reserve matters”, which includes strategic, financial and operational matters of the qualifying asset.
“Just to be clear, there are no areas of uncertainties between us and Salamander. It is all very clear and spelt out in all the agreements, which follow the international global standard which is the norm in the oil and gas industry,” said Datuk Saw Choo Boon, Sona vice president, business development.
While Sona awaits SC’s decision, time may not be on the company’s side. Its net loss widened to RM9.02 million in the first half ended June 30, 2014, compared with just RM763,000 a year before.
Losses will likely widen again in the coming quarter as it will only start to generate operating income once it has completed its qualifying buy. Its main source of income so far has been interest or profit earned from fixed deposits.
Its share price closed up 1.5 sen at 50 sen yesterday, with a market capitalisation of RM1.4 billion.

This article first appeared in The Edge Financial Daily, on September 24, 2014.