Loyz Energy issues new shares as final settlement of US$8.56m loan from Jit Sun (Amended)

CATALIST-LISTED Loyz Energy, an independent exploration and production upstream energy player, said on Monday it has entered into a placement agreement to allot and issue 465.87 million new shares at an issue price of S$0.0260 apiece.

The deal, sealed on Monday, is the full and final settlement for the outstanding loan balance of about US$8.56 million owed by the company to Jit Sun Investments.

At S$0.0260 per new share, it is a discount of about 2.3 per cent to the volume-weighted average price of S$0.0266 per share of Loyz Energy on Feb 24, 2017.

Following the proposed placement, Jit Sun would have a 10 per cent stake in Loyz Energy.

The 465.87 million new shares represent about 43.9 per cent and 30.5 per cent of the existing and enlarged issued and paid-up share capital of the company, respectively.

In a filing to the bourse operator, Loyz Energy said the placement would improve its financial position by reducing the overall debt profile of the group.

"Based on the unaudited consolidated financial statements as at Dec 31, 2016, the group recorded net working capital deficit of approximately US$8.3 million, total borrowings of US$30.3 million and a gearing ratio of 50 per cent," the company said. "Upon completion of the placement, ceteris paribus, the group's immediate net working capital position will turn positive, gearing ratio reduced to 44 per cent and total borrowings will be reduced accordingly, by approximately US$8.56 million (disregarding the expenses to be incurred in the placement)."

Jeffrey Pang, chief executive and executive director of Loyz Energy, said the move reduces the group's overall debt.

"Our stronger financial position will facilitate our pursuit for new strategic and accretive opportunities, and spur us towards our goal of generating sustainable and stable earnings for the group," he said.

Amendment Note: The article has been revised to reflect that Jit Sun would have a 10 per cent stake in Loyz Energy following the proposed placement and not 14.3 per cent as previously stated.