Petra ... Mar11

With an order book of rm1 billion and poised to grow with Petronas – which is beefing up its capex to some rm250 billion to explore new oilfields and replace ageing assets over the next five years – Petra Energy is now looking to build its capital base to enable it to bid for the slew of jobs that will come onstream.

Its proposed fundraising exercise is also to reduce gearing, which was at 45.85% as at Dec 31, 2010. It paid finance costs of rm9.05 million and rm14.26 million in FY2009 and FY2010.

A fundraising exercise would put the company in a good position to bid for big jobs. But from the shareholders’ point of view, a fundraising exercise could see their stakes diluted depending on the mode of fundraising.

If the company undertakes a rights issue, the shares are usually priced at a discount to the prevailing market price/ A discount of up to 20% and 39% is common.

Nevertheless, a rights issue is offered to all shareholders.

Petra Energy’s shareholding is unique in the sense that its two largest shareholders control some 60% of the company. Its highest shareholder is Shorefield Resources Sdn Bhd, a company linked to Datuk Bustari Yusof of Sarawak, with 30%. The second largest shareholder is Petra Perdana, with 29.59% stake. The rest of the shares are held by LTH and PNB.

With no clear controlling shareholder, a fundraising exercise will perhaps give the party that is willing to fork out more money for the company’s expansion the edge.

Its net assets per share stood at rm1.57 as at Dec 31, 2010. As of the same date, Petra Energy had Rm108.52 million in long term borrowings, rm95.61 million in short term borrowings and rm63.71 million cash. Its net debt stood at rm140.42 million and its net gearing ratio is 45.85% based on shareholders’ funds of rm306 million.

Judging from its relatively high gearing ratio, a fundraising is indeed essential to Petra Energy.