Subiaco company Kairiki Energy has cancelled a $12 million right issue that was “partially and conditionally” underwritten by Patersons Securities, after failing to achieve its minimum subscription amount.
The company said the prospectus for the 9-for-2 rights issue, pitched at 1 cent per share, has been withdrawn after failing to reach the $9 million minimum subscription.
The offer was underwritten by Patersons up to $9 million, but its underwriting agreement was conditional on eligible shareholders subscribing for at least $1.3 million of shares.
In addition, Kairiki's convertible note holder IMC Oil & Gas Investment had agreed to sub-underwrite the offer up to $7.7 million.
The proceeds were to retire $7.7 million of convertible note debt issued by IMC, and to provide working capital.
The company currently has 2.7 million shares on issue and the rights issue would have resulted in 12.1 million extra shares being added.
Kairiki twice extended the closing date for the offer, as it endeavoured to raise the funds.
It recently announced a preliminary agreement to acquire two onshore oil fields in China, with Singapore-based chairman Peter Cockcroft describing the proposed projects as a “game changer”.
"This is a great opportunity for Kairiki to grow into a significant oil producing company," he said in a statement issued on 9 May.
However, it appears other shareholders were unconvinced.