Rex unit proposes US$4.5m preference share issue to fund Oman well drilling

AN indirect unit of Rex International, Masirah Oil Ltd (MOL), is proposing to issue US$4.5 million of preference shares priced at US$477.70 apiece to Trace Atlantic Oil to fund its drilling activities and operations in Oman.

Rex indirectly holds a 92.65 per cent stake in MOL that will be reduced to 87.40 per cent following the Trace Atlantic deal.

Two controlling shareholders of Rex, Karl Lidgren and Hans Lidgren, have a 64.59 per cent deemed interest in Trace Atlantic held through intermediate entities, making the potential deal an interested person transaction.

Mr Karl Lidgren and Mr Hans Lidgren have a total 35.37 per cent deemed interest in Rex, where the former is a non-independent and executive director.

The capital will be used to fund MOL's drilling activities at its appraisal well Yumna in Block 50 Oman, its continued operations in Oman and general working capital.

Rex's audit committee said the investment round is on normal commercial terms and not prejudicial to interests of the company and its minority shareholders.

Preference shareholders will receive preferred dividend over ordinary shareholders of MOL, and will receive dividends before ordinary shareholders. No other priority is given to them.

The subscription amount represents 3.7 per cent of Rex's latest audited net tangible assets, which means the deal does not require the approval of Rex shareholders.

It is, however, subject to approval from the board of directors and shareholders of MOL.

The deal considered MOL's net asset value of US$61.67 million as at Sept 30, 2019 and its growth potential, as it wholly owns the Block 50 Oman concession.

MOL is in discussions for a further round of investment from other parties and will update shareholders accordingly, Rex said.

Rex shares closed unchanged at S$0.186 on Thursday.