KUALA LUMPUR (March 1): Sapura Energy Bhd said a Mexican unit of the group has been declared bankrupt, after it had failed to restructure its debts with creditors within the stipulated time frame given by a court in that country.
The unit, Sapura Energy Mexicana Sociedad Anónima Promotora de Inversión de Capital Variable (SEM), is a wholly owned subsidiary of Sapura Offshore Sdn Bhd and SapuraMex Pte Ltd, which are both ultimately wholly owned subsidiaries of Sapura Energy.
The order was made by the Second District Insolvency Court with residence in Mexico City and jurisdiction throughout Mexico, said Sapura Energy in an exchange filing on Friday.
It said SEM had filed for a restructuring on Dec 19, 2022. By a judgement dated April 18, 2023, the court declared SEM to be in commercial insolvency and the conciliation phase was initiated.
The conciliation phase was for a period of six months and may be extended twice, each extension being for three months. Sapura Energy had applied to extend the conciliation phase for the first time from Nov 20, 2023 to Feb 19, 2024.
"Prior to the expiry of the first extension of the conciliation phase, SEM applied to the court for a second extension of the conciliation phase as SEM was close to reaching the 51% of the votes of its creditors necessary to restructure the debt.
"The judge resolved that the extension petition was not properly signed by the required majority, because it resolved that certain powers of attorneys were insufficient, and automatically issued a bankruptcy declaration," Sapura Energy said, adding that a liquidator was then appointed for SEM to enter bankruptcy.
However, the group said SEM is challenging the court's decision and is preparing an appeal against the bankruptcy declaration on the grounds of improper rejection by the court of the extension request of the conciliation phase.
Additionally, SEM stressed that a restructuring agreement had been reached and communicated to the court before the issuance of the bankruptcy judgement.
"Concurrently, as SEM has already reached an agreement with the required majority of its creditors, it intends to refile the restructuring agreement to facilitate the restructuring of SEM’s debt and lift the bankruptcy declaration," said Sapura Energy.
The group, however, maintained that SEM currently does not possess any assets, conduct operations, or engage in any of the group's ongoing projects in Mexico. As such, the group does not anticipate any significant losses from the winding up of SEM.
The group's total investment in SEM is US$675 (RM3,206).
Sapura Energy has been operating in Mexico since late 2012, where it has worked closely with Mexican state-owned petroleum company Petróleos Mexicanos, or Pemex.
Sapura Energy, a Practice Note 17 company, is on the verge of bankruptcy, as it continues to progress in its restructuring plan, which includes efforts to resolve its unsustainable level of debt and amounts owed to trade creditors.
Most recently, Sapura Energy said it had received confirmation from the Corporate Debt Restructuring Committee that at least 75% of the financiers of its approximately RM10.3 billion in multi-currency financing facilities have provided the requisite approval-in-principle for a proposed debt restructuring scheme, which will facilitate court-convened meetings with all its creditors.
At Friday's market close, Sapura Energy's share price was down 0.5 sen or 10% at 4.5 sen, with a market capitalisation of RM744.23 million.