Magnus Energy Group says it will not be making an exit offer proposal to its shareholders following the delisting notice.
The company received a notification of delisting from the Singapore Exchange Securities Trading (SGX-ST) on Feb 21, and wrote to its top 20 shareholders to invite them to make an exit offer for its shares. The top 20 shareholders were based on the shareholding percentage as at Dec 30, 2022, says Magnus.
On March 6, the company’s board had received a single non-binding indicative expression of interest from a shareholder with the request for an extension of “a few months to do proper due diligence”.
Since there were no updates from the same shareholder, Magnus is warning its shareholders that a potential exit offer may not happen. The shareholder may also decide to not provide the exit offer after the completion of his due diligence on the company, adds Magnus via a bourse filing on April 10.
Furthermore, Magnus says it is unable to make any exit offer itself, which involves cash as a default. The company’s cash and bank balances of $1.1 million as at Dec 31, 2022, is mostly held by its 80%-owned subsidiary, Mid-continental Equipment, Inc. (USA). As at Dec 31, 2022, its net asset position was around $1.1 million.
The company adds that it has had to use its available cash resources for working capital purposes and that its cash and bank balances had been “depleted”. The company says it will disclose more details in its unaudited interim financial results for the quarter ended March 31.
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“The limited available cash resources that the group has on hand are needed to maintain and fund the company’s working capital mainly at the company level, its business operations in the USA under Mid-Continent Equipment, Inc. (USA) and in Indonesia under PT Meg Harta Indonesia (PT MHI); in particular as PT MHI has yet to resume operations and is still waiting for approval of the new RKAB quota in respect of the Kolaka Nickel Project as at the date of this announcement,” says Magnus. RKAB refers to Rencana Kerja dan Anggaran Biaya (or work plan and budget)
“While the group holds certain divestible assets, largely being industrial land and building in the US, however, these are deemed as less-liquid assets which would need time to dispose and there is uncertainty that a buyer can be found at a price acceptable to the company. In the instance that an asset can be sold, the funds realised from such [a] sale would be needed for growing the existing and new businesses in Indonesia,” it adds.
On April 6, the Singapore Exchange Regulation (SGX RegCo) publicly reprimanded five individuals – including former CEO Luke Ho Kee Yong – associated with the company for breaching the Catalist rules in connection with two transactions.
Shares in Magnus Energy last traded at 0.1 cent.
