Kairiki Energy Sheds More Light On RPM Group Transaction

Kairiki Energy Limited (ASX: KIK) is an Australia registered company, incorporated on 20 October 1982 as Donalda Resources NL. It is involved in the activity of exploration of oil and gas. KIK, having sold its operating subsidiary in the Philippines, is a single legal entity, which is being an ASX listed shell company.

Kairiki Energy Limited reported that on 19th July 2018, it had executed a binding Terms Sheet with the founders and shareholders of the RPM Group, under which the company conditionally agreed to acquire 100% of the businesses that form the RPM Group. Today, on 4th June 2019, the company, by release, updated the market about the extension for reinstatement to quotation on ASX by the beginning of trading on 29th August 2019. Furthermore, if the company is not reinstated to the quotation by the commencement of trading on 29 August 2019, then ASX will immediately remove the company from the official list of ASX from the commencement of trading on that day.

In accordance with the Disclosure Document, the RPM Automotive Group Limited pointed that the company is offering 25,000,000 New Shares on a post-consolidation basis at an issue price of $0.20 per share in consideration for raising $5,000,000. In addition, the minimum subscription under the public offer is 10,000,000 New Shares at an issue price of $0.20 per share to raise $2,000,000. The public offer has been made to provide funds to conclude the transaction and to finance the future growth of the business.

The RPM Group is involved in the Australian automotive sector, which comprises Revolution Racegear, Carline Automotive Group, RW Tyres, Spider GT, AIR Anywhere, Fix-My-Truck. The RPM Group will be issuing the vendors of the respective businesses Earnout Shares only if those businesses surpass the targeted EBITDA for FY19. The earnout shares have been capped with regards to the maximum number of shares that might be issued at 20% of the Consideration Shares payable for the respective business. Furthermore, KIK reported revenues of $33,415,070 in FY18, while revenues in FY17 stood at $22,492,759.

The RPM Group has intentions to grow by organically increasing the commercial vehicle tyre import and distribution business through increased market share for the Tianli, Long March and ancillary tyre brands. It is also developing the sales channel and cross-sell opportunities within the various businesses. However, the group is selectively acquiring automotive businesses, which fits the company's strategic direction.

Moving to the Quarterly Activities of the company. Kairiki Energy continued to progress with the acquisition of the RPM Group with a cash position of $50,000 for March 2019 quarter. In terms of the half-yearly results, Kairiki Energy presented a net loss from continuing operations of $78,690 for the half year ended 31st December 2018, which included general and administrative costs of $88,223.

The shares of the company were suspended from quotation on the ASX official list on the back of the company failing to meet ASX Listing Rule 12.1 on 27th May 2016.


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