PTT Exploration and Production Plc is calling for huge recapitalisation, by the issuance of 650 million shares which based on the latest closing price is valued at Bt107.6 billion.
The recapitalisation is expected to raise funds for the takeover of Cove Energy. PTTEP bids to buy a stake in Cove Energy for US$1.9 billion or approximately Bt60 billion.
PTTEP share priced ended today at Bt165.50.
PTT Plc said in a statement that the board approved the subscription of 403.4 million shares to maintain the company's 65.29 per cent holding in the flagship company. It said that the public offering price would be determined by a book building.
PTT President and CEO Pailin Chuchottaworn said “PTT has a mission to ensure the energy security and the sufficiency of energy supply for Thailand. Through our support by purchasing PTTEP’s newly issued shares, PTTEP will be able to operate consistently and efficiently and develop quality petroleum resources for the benefit of the country. PTT’s financial position remains strong with adequate liquidity to support this fund raising”.
The board perceived that the decision would support PTTEP’s investment plans for oil and natural gas reserves locally and internationally to meet Thailand’s growing demand for energy in line with PTT Group’s long term strategy to focus on upstream business.
PTT will pay the same price as other buyers. The board also approved to lend up to 32 million shares of PTTEP to the Over Allotment Agent, for "the purpose of price stabilisation of PTTEP shares during a period of 30 days from the day following the last subscription day for PTTEP newly issued shares".
In a filing to the Stock Exchange of Thailand, PTTEP's board of directors called for an extraordinary shareholder meeting on August 24 to approve the capital increase.
At the meeting shareholders will be asked to approve the issuance of 650 million shares. While 403.4 million will be allocated to PTT, 214.4 million shares will be allocated to the public.