KUCHING: Reservoir Link Energy Bhd (RLEB) has proposed a private placement that has the potential to raise up to RM12.1 million.
The proposed fundraising exercise entails the placement of up to about 37.8 million new ordinary shares, representing up to approximately 10 per cent of the company’s total number of issued shares, to third-party investor(s) to be identified later.
Based on an illustrative issue price of RM0.32 per placement share, the proposed private placement is expected to raise at least RM10.67 million (minimum scenario) and up to RM12.1 million (maximum scenario), RLEB said in a filing with Bursa Malaysia.
Subject to obtaining all required approvals, the company expects the proposed private placement to be completed in the second quarter of 2025.
RLEB intends to utilise RM7.39 million of the proceeds from the proposed private placement to fully fund the acquisition of a 30 per cent equity interest in Propel Maxflo Sdn Bhd (PMSB), and the balance for working capital requirements within 12 months.
On March 24, 2025, RLEB’s wholly-owned subsidiary Reservoir Link Sdn Bhd (RLSB) entered into a term sheet with Propel Oilfield Sdn Bhd (a 49 per cent-owned company of Propel Global Bhd) for the acquisition of about 545,044 ordinary shares, representing 30 per cent of the equity interest in PMSB for RM7.39 million in cash.
PMSB is principally involved in the provision of products and services for exploration, drilling, and well intervention, as well as enhanced oil recovery and improved oil recovery technologies.
Additionally, PMSB offers production technologies specifically for the offshore and onshore oil and gas, refining, chemical, and petrochemical industries.
The share sale agreement for the proposed acquisition of PMSB is expected to be signed and completed in the second quarter of 2025.
RLEB said the proposed private placement gives the company the flexibility to raise funds expeditiously and in a cost-effective manner as opposed to other forms of fundraising, such as a rights issue, and allows the company to raise necessary funds without incurring interest expenses compared to debt financing or bank borrowings.
Besides, the move is expected to strengthen the capital base of the RLEB group, which is involved in the provision of oil and gas well-related services, production enhancement services, and sand management solutions, as well as providing renewable energy (RE) activities in sustainability ventures-related businesses.
In the last private placement exercise completed on July 30 2024, RLEB raised about RM9.54 million, of which RM8.39 million was utilised for the development cost of a wastewater treatment plant, and RM807,000 for working capital.
“The global shift towards renewable energy presents a strategic opportunity for Malaysia, which in turn will benefit the company.
“The company’s investments in solar energy and other renewable projects may provide the group with a competitive advantage in the market and support the group’s position in the green energy transition.
“As part of the group’s long-term commitment to the transition to renewable energy and achieving stable financial growth, the group has been exploring and undertaking strategic diversifications into businesses that are synergistic and complementary to the group’s oil and gas operations, such as the provision of wastewater treatment services as well as the engineering, procurement, construction and commissioning of wastewater treatment plants and related infrastructure in 2023.
“The diversification of the group’s core activities aligns with the growing demand for RE solutions, thus allowing the group to cater to a diverse customer base and capitalise on future opportunities, benefiting the financial performance of the group,” RLEB said when commenting on the group’s prospects going forward.
RLEB said that while expanding into clean energy, the group remains committed to pursuing new tenders in the oil and gas industry.
“The acquisition of PMSB will allow the group to strengthen its customer base in the oil and gas services industry while enhancing operational efficiencies through synergies and optimised operations.
“The board (of directors) remains optimistic that the group is well prepared to leverage its established expertise in the oil and gas industry while expanding into the RE industry.
“Nevertheless, the board will remain vigilant and continue to exercise caution and take proactive measures in managing the group’s resilience and financial performance,” added RLEB.
