Highlight Sona Petroleum's future hangs on shareholders' nod next month

by **Cals** Thu 18 Feb 2016, 02:05

Highlight

[size=28]Sona Petroleum's future hangs on shareholders' nod next month

By Alex Chong / theedgemarkets.com | February 17, 2016 : 4:45 PM MYT

KUALA LUMPUR (Feb 17): Sona Petroleum, a special purpose acquisition company (SPAC), said the future prospect of the group is dependent on the outcome of its extraordinary general meeting next month.

That's when its proposal to acquire the Stag oilfield in offshore Western Australia for US$50 million (RM210.93 million) is expected to be put before its shareholders. The SPAC has until July 29 to complete its qualifying acquisition (QA). Failure to do so will see it liquidated and custodian account monies distributed to the respective shareholders.

"The group has entered into agreement for the acquisition of the Stag oilfield. Approval has been received from the Securities Commission Malaysia (SC) last Friday (Feb 12) for this proposed acquisition," said Sona Petroleum in a filing with Bursa Malaysia today.

However, the proposed acquisition is subject to certain conditions as the SC had noted that the independent technical and asset valuation expert considered the purchase price was "not fair" as the purchase consideration for the proposed acquisition was above its fair market value.

The SC added that shareholders should consider the purchase price, along with other factors, in deciding to whether approve the proposed acquisition or exit their investment in the SPAC and receive the amount in the trust account that is due to them.

In this regard, Sona Petroleum said it is currently in negotiations with the sellers of the Stag oilfield to reduce the purchase consideration for the proposed acquisition.

The company is also seeking relief from the SC's requirement that the fair market value of the QA must equal to at least 80% of the amount in its trust account.

As at end-December 2015, Sona Petroleum had RM527.55 million held in its custodian account. While the fair market value of the Stag oilfield is unknown, it is worth noting that the price tag of US$50 million is merely 40% of the amount in its trust account.

Meanwhile, Sona Petroleum narrowed its net loss to RM10.61 million in the fourth quarter ended Dec 31 2015 (4QFY15) from RM19.47 million a year ago, due to lower expenses incurred in evaluating the QA, which primarily comprised fees for technical, legal, finance and corporate advisory services and their direct expenses incurred for the due diligence exercise.

For the full year (FY15), the group also recorded a lower net loss of RM17.49 million compared with RM28.47 million in FY14, due to the same reason. It has no operations or income-generating business at this point.

As at 4.19pm, Sona Petroleum shares were traded down 1.08% at 46 sen, with 4.02 million shares done. Its market capitalisation stood at RM648.93 million.
[/size]