KUALA LUMPUR (March 12): Sapura Energy Bhd’s (KL:SAPNRG) stock rose to its highest in more than three months, after the troubled oil-and-gas services firm secured over RM1 billion bailout from the government.
The lifeline is crucial at a time when the industry is taking a pause through an investment upcycle, BIMB Securities analyst Azim Faris Ab Rahim told The Edge. The company’s recovery path is now clear, with its debt restructuring plan approved and additional funding secured, he said.
“There is light at the end of the tunnel,” said Azim Faris, one of only two analysts covering Sapura Energy. “This will put the company in a better position to ride on the upcycle on oil and gas upstream investment currently in the correction phase before another upcycle.”
Sapura Energy rose to as high as 4.5 sen, last seen in November 2024, on Wednesday. The stock paused for the midday break at four sen, giving the company a market capitalisation of RM735 million.
On Wednesday, the debt-laden company announced that the Ministry of Finance had agreed to subscribe to its redeemable convertible loan stocks worth RM1.1 billion, subject to certain conditions.
The monies have been earmarked exclusively for settling what Sapura Energy owes its vendors.
“We least expect that it will be the government who is bailing out the company, but if it didn’t, there was unlikely to be another party willingly to take on the risk,” said BIMB Securities’ Azim Faris.
A shareholding dilution is inevitable, though the exact impact remains uncertain for now, he noted. “But the market appears optimistic about Sapura Energy’s PN17 (Practice Note 17) exit prospects, as reflected in its stock price movement,” said Azim Faris, who has a ‘buy’ call on the stock.
Sapura Energy had obtained the court's sanction for its debt restructuring plan on March 6.
The sanction follows creditors' approval secured in February for its proposed debt restructuring scheme to address RM10.8 billion owed to nine lenders of its multi-currency financing facilities and RM1.5 billion in outstanding trade creditor payments.