Asiasons soars on plans for US oil firm stake
Asiasons also raising $254m from share placement to four new investors
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Asiasons also raising $254m from share placement to four new investors
Angela Tan
18 September 2013
Asiasons Capital Limited’s share price soared to a record high yesterday on news that the South-east Asia-centric investment group plans to buy 27.5 per cent of Houston-based Black Elk Energy Offshore Operations LLC’s common voting units for US$171.65 million, payable in new shares.
Asiasons shares opened at S$1.41 and rallied to S$2.08, before closing at S$2.05, up 72.5 Singapore cents yesterday. More than 22 million shares changed hands.
Asiasons, whose chairman and co-founder is Mohammed Azlan - former chairman of the Kuala Lumpur Stock Exchange - said that buying Black Elk would “enable the company to participate in the oil and gas resource industry which will bring benefits to the company and enhance long-term shareholder value”.
Noting the high entry barriers to the US oil and gas market, Asiasons described the acquisition as “an attractive proposition”, given its oil resource assets and the location of its operations in the Gulf of Mexico, one of the world’s largest producers of oil and gas.
Oil and gas company Black Elk was founded in late 2007 by its CEO John Hoffman. It has producing assets located offshore in US federal waters, as well as in Louisiana and Texas state waters in the Gulf of Mexico. The company has an estimated total proved oil, natural gas and natural gas liquids (NGL) reserves of 45.2 million barrels of oil equivalent (MMBoe) and estimated net proved oil, natural gas, and NGL undeveloped reserves of 19.5 MMBoe. It produces about 14,000 barrels of oil per day.
Earlier this year, Black Elk made its debut on Houston’s Fast 100 list, which ranks the fastest-growing private companies in the city based on percentage growth of revenue between 2010 and 2012.
In the first half of 2013, Black Elk’s results were hit by the continued effects of a November 2012 explosion and fire on an oil production platform that it operated in the Gulf of Mexico, which left three workers dead and many injured.
Black Elk’s latest annual report showed that it had a net working capital deficit of about US$71.7 million at end-December 2012. It incurred a net loss of US$64 million in the year ended Dec 31, 2012.
In June, credit rating agency Moody’s Investor Services changed its rating outlook on Black Elk to “negative” from “stable” on concerns over the sharp deterioration in its liquidity position. It was also concerned about the company’s ability to cover costs associated with its drilling programmes.
Asiasons plans to issue about 194.64 million new shares at S$1.1948 each to pay for the Black Elk purchase. The share price represents a 10 per cent discount to the volume weighted average price for trades done on Sept 12, 2013.
Under the plan, it will subscribe to about 9.96 million Class B units of Black Elk for about US$50 million. This will be paid through the issue of about 56.70 million new Asiasons shares.
Asiasons will also buy about 24.23 million of Black Elk Class B units from PPVA Black Elk “Equity” LLC for US$121.65 million. This will be payable through the issue of 137.95 million new Asiasons shares.
Under the different share classifications, Class A and B units come with voting rights.
Asiasons said that upon completion of the proposed subscription and proposed acquisition, “the company will own and hold approximately 27.5 per cent of common voting units (comprising Class A units and Class B units) of Black Elk”.
The deal is subject to several conditions being met, including due diligence by Black Elk.
Yesterday, Asiasons revealed that four new investors had agreed to subscribe to about 212.59 million new Asiasons shares at S$1.1948 each, amounting to S$254 million.
The new investors are Carnegie Hall Group LLC, Partner Growth Capital LLC, Spring Road Advisors LLC and Platinum Partners Value Arbitrage Fund LP.
Asiasons said that the funds will enable it to capitalise on opportunities in the mineral and oil & gas industries.
Jett Capital Advisors LLC will be getting 10.63 million Asiasons shares as fees for introducing the proposed subscription and receive 12.19 million Asiasons shares when the acquisition is completed.