CBM Asia to raise fund, cut costs

By Alexander Ginting

Canadian firm CBM Asia Development Corp. announced on Monday a non-brokered private placement of CAD$11,000,000 secured loans with bonus shares. The Company also announces substantial costs cutting measures.

The Company is offering up to 550 Units at a price of CAD$20,000 per Unit for aggregate gross proceeds of up to CAD$11,000,000, subject to the Issuer's right to increase the size of the Offering at its sole discretion. The Units will be sold directly by the Issuer and through certain dealers, agents and other finders.

Each Unit consists of one Note in the principal amount of CAD$20,000 and 80,000 Bonus Shares.

According to the company, the proceeds for the Offering will be used to fund its obligation of the Kutai West PSC Phase I development project in East Kalimantan and Sekayu PSC appraisal work in South Sumatra.

The company also reported that it has taken significant steps to reduce general and administrative (G&A) expenses and operational running costs from US$3.8-5.0 million to US$1.8-2.2 million per year.

Key cuts include; Reduced Vancouver office staff levels to one and cut executive pay by 50% including the President and CEO. Office size was also reduced and the investor relations program cut by 90%. These actions plus anticipated lower legal fees are expected to reduce corporate costs from US$2.0-3.2 million to US$1.0-1.4 million per year.

Reduced operational costs by cutting the Jakarta office staff level from 22 to four and reducing office size. These actions are expected to reduce costs from US$1.8 million to US$840,000 per year.

President and CEO Charles Bloomquist noted that, "The Company has been under new executive management since late January. In the short time since then, staffing and costs have been substantially reduced and the Company has focused on the development of commercial gas production from the Kutai West PSC. Kutai West is our most significant asset with 705 Bcf of independently evaluated gas resource (net to CBM Asia), is located next to the Sanga-Sanga PSC which is already in commercial production, and offers excellent alternatives for marketing gas at attractive prices in the near term."

CBM Asia holds various participating interests in five PSCs for CBM in Indonesia.