Sunday, 31 January 2016

To Cliq or not to Cliq? (5)

I have been rather sceptical about Cliq's qualifying proposal.

The company announced on Bursa the following (some snippets, emphasis mine):

.... the SC had vide its letter dated 29 January 2016 addressed to Maybank IB, returned the Application as the SC is unable to proceed with its review due to required information and documents that have yet to be submitted to the SC relating to several fundamental matters in relation to the Application that have yet to be addressed, in particular:

(i)         Supporting data used in the assessment of the volume of oil reserves by the independent technical expert that has yet to be provided to the SC. Without this, the SC is unable to determine if disclosures to shareholders of CLIQ are appropriate;

(ii)         An independent expert was appointed to provide a fairness opinion as required under item 4, Part F of Appendix 10B of the Main Market Listing Requirements issued by Bursa Securities (“Fairness Opinion”). However, the independent expert has relied on the asset valuation report prepared by the asset valuation expert, despite not taking a view on the reasonableness of the report and its contents, in arriving at its fairness opinion. This qualification has been specifically stated in its Fairness Opinion. As a result, shareholders of CLIQ would not have the benefit of a fairness opinion that encompasses all aspects that they need to consider to make an informed decision; and

(iii)        The technical reports prepared by the independent technical expert and the Fairness Opinion have not been updated to reflect the current oil prices trends. This is not in compliance with paragraph 3.34 of the SC’s Guidelines on Due Diligence Conduct for Corporate Proposals.

The Company has taken all reasonable efforts to address the above required information and documents in relation to the Application. However, the Company had also encountered certain unanticipated external factors beyond its control namely:

(i)         substantial drop in oil price since the signing of the SPA on 24 March 2015; and

(ii)         substantial depreciation of RM against USD which resulted in the shortfall of cash available to satisfy the purchase consideration for the Proposed Acquisition.

In addition, the Company was unable to obtain certain information from third parties to support the assessment of the volume of oil reserves and consequently, the relevant updated reports which were all required for the Application.

The Board will deliberate on the next course of action to be taken and an announcement will be made by the Company in due course.

I would like to add that the economy of Kazakhstan and its currency also have been hit severely by the sharp decline of commodities. I am pretty sure that therefore the sellers would like the deal to continue (all foreign money is probably welcome at the moment).

But is this deal at the agreed price, given the current situation in the oil and gas industry, in the best interest of the shareholders of Cliq? Time will tell.


  1. This Cliq deal is quite fishy. The same deal was previously offered to an interested firm in Hong Kong.

    This morning, heard over news that Cliq said the incomplete documents was due to restriction not within their control!!!

    Is the vendor hiding anything?

    1. Thanks for your comment. But if the BoD of Cliq cant get the information, should they not be very worried? What the SC asked was quite reasonable. Even if the SC had not asked for this information, surely the BoD should have made sure they had that information and provided it to their shareholders. This deal is dragging on for a much too long time, with conditions changing markedly.