Two substantial shareholders of KrisEnergy, which is in the midst of a long-drawn debt restructuring process, have called for an extra-ordinary general meeting after the company said on March 31 that there’s “material uncertainty” to its ability to complete the restructuring.
This was because of lower-than-expected production levels at one of the three oil and gas fields in which KrisEnergy holds stakes in.
KrisEnergy, which holds working interests in three producing oil and or gas fields in the Gulf of Thailand and offshore Cambodia, and one onshore Bangladesh, has faced problems servicing its debts after the oil market slumped a few years ago.
The two requisitioning shareholders are Serle Investments, represented by Michael Yeoh Sock Siong, and Ng Kay Yip. They claim to hold more than 317.6 million shares, or 21.3% of KrisEnergy combined.
Yeoh is part of the YTL Yeoh family and Ng is known to be one of the co-founders of jobs portal Jobstreet.com.
They want to call an EGM to seek shareholders’ approval to form a committee of minority shareholders to review the on-going restructuring process, and possibly put forward an alternative proposal.
Shareholders holding more than 10% of the shares have a right to call for an EGM.
KrisEnergy’s largest shareholder, and a key creditor, is Keppel Corp.
“The board has verified that the requisitioning shareholders collectively hold not less than 10% of the paid up voting share capital of the company and is seeking legal advice on holding an EGM pursuant to the requisition notice under the complex circumstances currently faced by the company,” says CEO Kelvin Tang in an SGX announcement on April 10.
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“The board will provide an update to shareholders as and when there are material developments on this matter,” he adds.
SEE: Keppel Corp to determine 'best course of action' on KrisEnergy’s restructuring
In an April 7 letter sent by the requisitioning shareholders to KrisEnergy, they note that Ng had written to the board in mid-February with some questions on the restructuring, and to ask for the appointment of an independent financial adviser.
However, Ng has yet to receive a reply from KrisEnergy after more than a month.
According to KrisEnergy’s earlier restructuring proposals, the Apsara field was projected to be able to produce 8000 barrels per day. The number was then revised to 7,500 barrels per day.
The company subsequently reported average daily production of 2,883 barrels between Feb and March this year.
On the other hand, oil prices over the past 12 months increased from US$23 to US$65, which could have “counterbalanced” the shortfall in output, wrote Ng and Michael Yeoh Sock Siong, representing Serle Investment, in their EGM requisition letter.
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“It is difficult for shareholders to fully appreciate the impact of this latest development, given that the announcement from KrisEnergy dated March 31 omitted to discuss the impact of rising oil prices in detail,” said the two shareholders.
Due to impairment taken on its assets, KrisEnergy on Feb 24 reported losses of US$209.4 million for FY2020 ended Dec 2020, slightly worse from losses of US$171.4 million in the preceding year. Revenue in the same period was down 64.1% to US$45.4 million.
The net loss recorded in FY2020 deepened the KrisEnergy’s capital deficiency position to US$346.1 million and the net current liability position to US$604.9 million as at Dec 31 2020.
Total debt recognised on its balance sheet was US$578.8 million and gearing increased to 248.7%.
