RH Energy

RH Energy: plans to undertake a reverse takeover (RTO) that will transform the loss-making oil and gas equipment company into a Chinese property developer. RH Energy said yday that it had entered into a "non-binding memorandum of understanding" to move towards that goal. Under the proposed deal, RH Energy intends to effect a 3-into-1 share consolidation and a 3-into-1 warrant consolidation with a corresponding exercise price adjustment. RH Energy will then buy all of ChiwayLand Group from Sinway Investment Co. ChiwayLand is a property developer with residential and commercial properties in the Yangtze River Delta region in China and a pipeline of 1.7m sm of projects. ChiwayLand will be bought for up to $396m through the issuance of up to 549.3m new consolidated shares at $0.69 per consolidated share. RH will also sell its existing business to current 59% shareholder Petchem Holdings for not more than $25m in cash. The actual price for the existing business will be negotiated between RH Energy and Pet-chem, which is owned by RH chairman Wang Hairong, chief financial officer Tan Eng Ann and other former directors of the company. Petchem aims to pay for the assets through a placement, which intends to pay for the assets partly by selling RH Energy shares and warrants that it holds. The deal is subject to conditions, such as due diligence reviews, board approvals and a whitewash waiver for Sinway, to avoid having to make a general offer for RH Energy. RH Energy shares last traded at $0.143 on Thursday before trading was halted yesterday. The counter resumes trading this morning, is +40% at $0.20.