This article first appeared in The Edge Malaysia Weekly on February 10, 2025 - February 16, 2025

TAN Sri Shamsuddin Abdul Kadir has finally broken his silence with regard to the legal dispute between his two sons: Tan Sri Shahril Shamsuddin and Datuk Shahriman Shamsuddin. Shahril is fighting a petition filed by Shahriman, who is looking to wind up the privately held Sapura Holdings Sdn Bhd.

Shamsuddin, now in his 90s, came out to state in an affidavit early last week that he had founded the entity, Sapura Holdings, as a family company to be controlled and run equally by his two sons.

This pours cold water on assertions made by Shahril and Datuk Rameli Musa — two of three respondents named in Shahriman’s petition — that Sapura Holdings is not a family company in separate affidavits filed in response to Shahriman’s petition. Sapura Holdings is the third respondent named.

Shahriman also alleges that Shahril and Rameli are aligned and have ganged up against him.

The two brothers are equal shareholders of the company, controlling a 40.5% direct stake each and an indirect 15% stake via Brothers Capital Sdn Bhd, which they own equally. Businessman Rameli, who is best known as the controlling shareholder of Ingress Bhd, holds the remainder 4% in Sapura Holdings.

In his affidavit, Shamsuddin says: “In particular, I wish to declare that Sapura Holdings was intended by me, and still remains, the family holding company for the betterment and security of my family. When I first incorporated the company 50 years ago, I did so to build the means to keep my family secure and everything I built would be for them. Eventually, as my sons were furthering their education, the intention was clear that they would come back and join the family business and eventually run it.”

He adds that he had written to both sons at the end of July suggesting that if they could not work together, “it would be best for all concerned that the two of them part ways by severing their corporate relationship with Sapura Holdings equally. The animosity between the two brothers was not only adversely impacting Sapura Holdings, but also other companies holding the same name, the family, and me personally”.

The Edge understands that some of the companies that are under the Sapura Holdings banner have had issues with financial institutions. The companies include oil and gas outfit Sapura Energy Bhd ­(KL:SAPNRG), in which Sapura Holdings has a 11.25% stake, and commercial property owner Sapura Resources Bhd (KL:SAPRES), in which the private company has 51.84% equity interest.

Shamsuddin, meanwhile, owns 28% of Sapura Industrial Bhd (KL:SAPIND), the mainstay of which is high-precision machining of engine, transmission and brake components and other modular components for the automotive industry, among others.

In his affidavit, Shahril says: “Even though the petitioner and I are brothers, it is misconceived for the petitioner to say that Sapura Holdings is a family company and thus the relationship between all shareholders is one premised on mutual trust and confidence.

“There has never been any understanding or arrangement between my father, the petitioner and myself that family interest is fundamentally linked to the purpose and running of the affairs of Sapura Holdings. There has never been a condition of mutual trust and confidence upon the assumption and transfer of shares to the petitioner and myself.

“The petitioner fails to consider the position of the third respondent Rameli as a shareholder and director of Sapura Holdings. Rameli is not a family member and fully subscribed for his shares in his own right. He is not a nominee of any party.”

Rameli, who has known Shamsuddin since 1980, says in his affidavit that Shahriman had approached him in July 2024 to jointly liquidate Sapura Holdings but that he had declined.

“I assert that the petitioner’s (Shahriman) invitation that I join him in winding up Sapura Holdings shows that he does not genuinely believe I am aligned to Shahril,” Rameli says in his affidavit.

Shahriman filed the winding-up petition on Sept 23 last year on the grounds that it is “just and equitable to do so”, because “there has been a complete breakdown in the relationship of mutual trust and confidence” between him and Shahril, who “no longer trust each other, and they agree that they can no longer work together”.

According to his petition, they “are not even on talking terms”.

The dispute has its roots in a development project dubbed Project Apex, which involved the construction of Permata Sapura, a 52-storey skyscraper located near KLCC, close to the Petronas Twin Towers in the city centre.

Shahriman was of the opinion that Sapura Resources lacked the capital to build and operate Permata Sapura and suggested that the building be sold. Shahril, on the other hand, believed that a cash call, with shareholders injecting funds into Sapura Resources, would resolve all issues.

Sapura Resources, which had already received financial assistance of RM168 million from Sapura Holdings, had proposed as settlement the issuance of 373.33 million preference shares at 45 sen each, together with a proposed rights issue to raise RM33.5 million.

Project Apex was a 50:50 joint venture (JV) formed by Sapura Resources and KLCC Holdings Sdn Bhd in 2011 to develop and construct Permata Sapura for about RM108.5 million cash.

The JV company, Impian Bebas Sdn Bhd, eventually invested about RM1.26 billion in building Permata Sapura.

A key part of Project Apex was that three related companies — Sapura Energy, SEB Upstream Sdn Bhd and Sapura Secured Technologies Sdn Bhd — would sign a master lease agreement with Sapura Resources as tenants.

But this did not happen as Sapura Energy, which was once an oil and gas giant, came under the control of Permodalan Nasional Bhd (PNB) after a cash call in 2018. PNB ended up with a 40% stake in the ailing Sapura Energy after the oil and gas company’s cash call to raise RM4 billion — RM3 billion from a five-for-three renounceable rights issue at 30 sen each and RM1 billion via a two-for-five renounceable rights issue of new Islamic redeemable convertible preference shares at 41 sen each. PNB also took up unsubscribed rights shares, resulting in its shareholding in the company ballooning to 40% from 12.6%.

In April 2023, KLCC Holdings proposed that Sapura Resources, if it wanted to exit the JV, pay RM85 million to exit Project Apex, which Shahriman was keen on but which Shahril opposed.

What made things worse was that Sapura Resources holds a master lease agreement, which started on Oct 1, 2021, for about 70% of Permata Sapura’s lettable area, and rent had to be slashed to attract tenants.

As at end-January 2024, 82.6% of Permata Sapura’s existing occupants were renting below the master lease agreement’s base rate, weighing down Sapura Resources’ financials.

Permata Sapura was reported to have a net book value of RM408.09 million as at early October 2021, according to Sapura Resources’ annual report. Raine & Horne, in Sapura Resources’ circular to shareholders for the preference shares and rights issue, ascribed a market value of RM1.526 billion to Permata Sapura as at April 30, 2024.

While the two brothers did not see eye to eye on Project Apex, governance issues that cropped up at Sapura Resources added to the rift between them.

In July 2024, the minority shareholders of Sapura Resources lambasted the management at an annual general meeting (AGM), alleging that Shahriman, who was then the managing director, had acted in a manner conflicting with the best interests of the company and other shareholders.

Sapura Resources, other than its core property business, also has an aviation business, which involves private aviation services, including aircraft handling and management services out of Subang Airport.

Back in July 2023, Sapura Resources, after the adverse effects of the Covid-19 pandemic, had sought to exit the aircraft maintenance, repair and overhaul business and had gone as far as signing a non-binding conditional heads of agreement with RoyalJet LLC for the proposed disposal of its entire aviation business.

However, prior to the sale, Explorer Group Sdn Bhd — a company in which Shahriman is a shareholder and executive director — signed a memorandum of understanding with RoyalJet to collaborate on private flight operations out of Subang Airport.

Sapura Resources’ minority shareholders were vexed, to say the least, and showed their displeasure at the AGM.

On Sept 11, 2024, Shahriman was placed on leave of absence as an investigation into him commenced, on a potential conflict of interest. On Oct 10, Sapura Resources issued show cause letters to Shahriman and re-designated Reza Abdul Rahim — formerly a chief financial officer (CFO) of Sapura Energy — as executive director and acting managing director.

Just over a month later on Oct 29, Shahriman resigned. In the Bursa Malaysia filing in which Sapura Resources announced the resignation, Shahriman stated: “I have resigned due to disagreements with the board of directors of Sapura Resources and with my co-shareholders, particularly on the allegations against me that I have acted in conflict of interest with my duties as a director. To reiterate, I deny all allegations made and expressly reserve my rights.”

Shamsuddin’s affidavit seems to favour Shahriman’s take that Sapura Holdings be wound up.

However, as stated by Shahril in past conversations with The Edge, and by Sapura Holdings’ chief financial officer Abbas Ariff in Sapura Holdings’ affidavit, the company employs close to 1,000 employees and had, as at the end of January 2024, a net value of RM832 million. Winding up the company, which undertakes contracts involving cybersecurity, national defence and other security-related projects for the Malaysian government could complicate matters. 

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