Friday, October 21, 2011

Hibiscus Flowering, Swift Trade Opportunity

Looks like Hibiscus has secured a major deal, which is purported to be "pretty decent". Having not seen daylight since listing, its move up last two days would indicate that the grapevine is probably right. A swift trade opportunity here below 73 sen. As management's shares are still under moratorium, its kinda "safe" to say its not a churn and burn exercise.

Hibiscus Petroleum is the first Special Purpose Acquisition Company (SPAC) to be listed on Bursa Malaysia. SPACs are companies which have no operations or income-generating business but undertake an IPO for the purpose of raising funds for a qualifying acquisition (QA) i.e. to acquire operating companies or businesses. The company intends to establish itself as junior independent player in the upstream exploration & production (E&P) segment of the oil & gas industry, and focusing on assets (oil and gas fields) in South Asia, Middle-East, East Asia and Oceania regions.

1) Investors are guaranteed a minimum refund of 90% of the IPO price if the SPAC fails to identify and complete a QA within three years or if investors vote against an approved QA. This implies a form of capital protection; 

2) Management appears to be highly experienced with credentials from major oil & gas companies

Key terms for “management and non-independent directors”. Shares and warrants are subject to SC moratorium up to the QA. Under their 3-year service contracts, any member of the management or non independent directors who resign or dispose of their shares can only do so at a 30% discount to the market price, and sell only to the remaining management team members. The team cannot participate in the distribution of proceeds from the QA or the liquidation of the SPAC. No directors’ fees will be paid until the QA is completed and there will be no adjustment to the remuneration package or introduction of performance incentive schemes prior to the QA.

NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). I may have a position in the counter already. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.


JL said...

wow...just managed to get in on Friday near closing and saw it suspended this morning. fingers cross for a positive announcement.

thanks for the tip, dali. you da man.

ronnie said...

OMG. You are the Oracle of KL

JL said...

Juct checked up on the announcement by Hibiscus regarding the purchase of 35% stake in Lime. Was caught out a bit when I could not find any info on Lime on the internet. So it is a pretty hush hush company and considering the nature of the business probably explains why.

3 exploration blocks signed with 3 different governments. given 2 year period for exploration and 20 year extraction rights. sounds good.

i do think that the process could be drawn out long as there are 2 tranches to be fulfilled before the go ahead is given for the purchase of the 35%.

dali's quick trade headline is spot on. let's see when the suspension of trading is lifted.