Borneo Oil Group sees overwhelming response for rights issue

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LABUAN: Borneo Oil Bhd (Borneo Oil), which has successfully transformed itself into a major gold mining player in Malaysia, saw its recent rights issue subscribed by 112.53 per cent.

To recap, BornOil had embarked on a renounceable rights issue entailing up to 2.373 billion rights shares at an issue price of RM0.10 per rights share on the basis of six rights shares for every one existing Borneo Oil share held, together with up to 1.186 billion free detachable Warrants C on the basis of one free Warrant C for every two rights shares subscribed.

The company’s substantial shareholder – namely, Victoria Ltd and Hap Seng Insurance Services Sdn Bhd – had also backed BornOil to the hilt by fully subscribing for their respective entitlements.

“We would like to express our deepest appreciation to shareholders for the solid backing and confidence demonstrated with regards to Borneo Oil’s bright prospects ahead,” said executive director Raymond Teo in a statement on Monday.

“This was a massive corporate exercise and we are extremely pleased with the outcome,” he added.

What was remarkable about this corporate exercise was that the RM231.52 million raised equates to 600 per cent of Borneo Oil’s market capitalisation of RM38.58 million as of October 16, 2015.

Currently, Borneo Oil’s paid-up is 385.86 million shares and, upon completion of this exercise, the paid-up would have soared to 2.70 billion shares.

Borneo Oil plans to use the proceeds from the rights issue for gold mining, limestone mining, fast food operations, future investments and repayment of borrowings.

On the gold mining front, Borneo Oil has to date signed exclusive production sharing agreements to carry out mining works at five sites on 1,500 hectares in Pahang.

These mining arrangements do not carry any acquisition cost as infrastructure and development facilities were already in place at the two sites.

“At our end, we will continue to work hard and smart in our pursuit of excellence for our core businesses and to maximise value for all shareholders,” added Teo.