This article first appeared in The Edge Malaysia Weekly on September 30, 2024 - October 6, 2024

ONE of the three shareholders of Sapura Holdings Sdn Bhd — Datuk Shahriman Shamsudin — filed a petition with the High Court on Sept 23 to wind up the family’s investment vehicle, according to a court document.

Shahriman and his elder brother Tan Sri Shahril Shamsudin own a direct stake of 40.5% each in Sapura Holdings. Meanwhile, Brothers Capital Sdn Bhd, their other vehicle, holds a 15% stake and Datuk Rameli Musa owns 4%, as stated in the court document.

The assets owned by Sapura Holdings include a 51.1% stake in Sapura Resources Bhd (KL:SAPRES) and an 11% stake in Sapura Energy Bhd (KL:SAPNRG). Shahril also holds a direct stake of 18.4% in Sapura Resources. The investment vehicle owns several private companies that are involved in businesses such as rail operations, luxury watches and services for the defence sector.

The hearing date has been set for Oct 21. Shahril’s response to the petition is not known at press time. He has 14 days to file his response with the court.

When contacted, Shahril tells The Edge that he is abroad currently. “It’s business as usual in the company. Yes, I understand there is a petition. As I am travelling, I have no comment at this time,” he tells The Edge.

Shahriman had not responded to The Edge’s query at press time.

According to the court filing, the two brothers started discussions on the separation of wealth in early 2023. They sought consultation with EY Malaysia to advise them on the valuation of Sapura Holdings for the purpose of separation. The consultation included an indicative share valuation analysis on each company in the Sapura Group.

However, the discussions were not fruitful. Consequently, Shahriman opted to wind up Sapura Holdings in order to speed up the asset separation process.

“The assets of Sapura Holdings can then be distributed equitably by an independent liquidator. Only by winding up Sapura Holdings will that be possible. Only by winding up Sapura Holdings can a clean break be achieved,” the document reads.

The two brothers have differences on the 50% ownership of Permata Sapura, a stone’s throw from the landmark KLCC Twin Towers. It is dubbed Project Apex in the court document.

In summary to the document, Shahriman reckoned that Sapura Resources has no financial means to continue with Project Apex, referring to Permata Sapura Tower. He suggested that Sapura Resources sell its stake in the project.

Sapura Rescouces holds a 50% stake in a joint venture with KLCC Holdings Sdn Bhd (KLCCH) to develop an office block — Permata Sapura along Jalan Pinang in Kuala Lumpur. The building was completed in 2020.

For the six months ended July 31, 2024, Sapura Resources continued to be in the red, posting a net loss of RM27.61 million compared with a net loss of RM39.34 million in the same period a year earlier, despite a 45% jump in revenue to RM37.16 million from RM25.63 million previously.

According to Sapura Resources’ 2024 annual report, Permata Sapura is a 52-storey tower comprising an office tower, a convention centre, mechanical floors, a retail podium and a four-storey basement car park. The building has 641,938 sq ft of net lettable area (NLA) of office building space.

Under the joint-venture agreement, Sapura Resources has a 15-year Master Lease Agreement (MLA) in place, commencing from Oct 1, 2021, for about 449,000 sq ft of NLA or 70% of the office tower in Permata Sapura.

The group said it managed to increase the sub-tenancy rate from 16% as at Jan 31, 2023, to about 91% as at Jan 31, 2024. Currently, 82.6% of the existing occupants are renting below the rate stated in the MLA. This has put a strain on Sapura Resources’ financials.

Under the MLA, Sapura Resources is obliged to make monthly lease payments for the 70% lettable space in Permata Sapura.

However, because the space has been rented out at below the MLA rate, Sapura Resources was not able to meet the payments. Consequently, its sister company Jurudata Sdn Bhd (JSB) paid Impian Bebas Sdn Bhd (IBSB), which is the JV company between Sapura Resources and KLCCH for Pertama Sapura, on behalf of Sapura Resources.

In July, Sapura Resources issued redeemable convertible secured loan stocks (RCSLS) to settle the RM168 million owed to JSB, due to its tight cash flow. JSB is owned 92.18% by Sapura Technology Bhd, which is a unit of Sapura Holdings.

Sapura Resources also made a cash call involving 119.66 million shares, raising gross proceeds of RM33.5 million, to ensure that the group is able to meet its payment obligations under the MLA with IBSB in the coming years as they become due, in the event that the revenue generated from the leasing and tenancy of Permata Sapura is insufficient to meet such payment obligations, according to circular to shareholders filed to Bursa Malaysia in June.

Shahril gave an undertaking to take up the unsubscribed portion and that raised his direct stake in Sapura Resources to 18.4%. Meanwhile, Sapura Holdings subscribed for 61.07 million shares at RM17.10 million to maintain its shareholding in the company.

Sapura Holdings’ company filing shows that its total assets amounted to RM2.10 billion and it had total liabilities of RM1.33 billion. It had net assets of RM680 million.

For the financial year ended Jan 31, 2023, Sapura Holdings posted a profit after tax of RM13.58 million, compared with a loss of RM595.42 million a year earlier. For the period in review, the group paid out RM128.36 million in dividends. 

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