This article first appeared in The Edge Malaysia Weekly on March 17, 2025 - March 23, 2025

FROM a 10-storey blue-domed office building that overlooks a scenic lake in Jalan Tasik, The Mines Resort City, in Seri Kembangan, Selangor, oil and gas outfit Sapura Energy Bhd (KL:SAPNRG) — a Practice Note 17 company — has moved into the much older 40-storey Menara PNB in Jalan Tun Razak, which was built in 1984.

Then again, Sapura Energy is the beneficiary of a RM1.1 billion “investment” by the Ministry of Finance’s Malaysia Development Holding Sdn Bhd (MDH) which, despite the many denials, is still considered by many (including this newspaper) as a bailout.

No less than the prime minister, Datuk Seri Anwar Ibrahim, has come out to insist that the RM1.1 billion cash injection was not intended as a bailout. “This is not a bailout, but it is being implemented in the form of a loan,” he said at his address at the finance ministry’s monthly assembly last Thursday.

Echoing the same tune that the injection of RM1.1 billion by MDH is not a bailout is Minister of Communications Datuk Fahmi Fadzil.

The reaction to the term “bailout” is understandable considering that Anwar in 2022 had debated jailed former prime minister Datuk Seri Najib Razak and vehemently criticised the previous government for approving Sapura Energy being given a lifeline via state-controlled Permodalan Nasional Bhd (PNB), which forked out RM2.68 billion in a cash call in 2019.

Interestingly, Anwar last Thursday added that there had been a complete overhaul of Sapura Energy’s top leadership as it was one of Putrajaya’s conditions prior to channelling the funds into the financially strapped company.

This rant on the top leadership stems from Sapura Energy’s previous management, under Tan Sri Shahril Shamsuddin, who retired in March 2021 after helming the company since July 2003 (when it was still SapuraCrest Petroleum Bhd). Shahril had a total income of RM443.9 million from FY2013 to FY2021, or an average income of RM49.3 million a year for nine years. Even when the company suffered losses from 2016, he continued to be handsomely remunerated — his annual remuneration and incentives between FY2014 and FY2021 were between RM71.9 million and RM89.4 million.

There were also “intellectual property rights, trademarks and branding” fees of RM438.4 million coughed up by Sapura Energy, of which RM295.8 million went to Sapura Holdings Sdn Bhd, which was controlled by Shahril and his brother Datuk Shahriman Shamsuddin and has a substantial stake in Sapura Energy.

Muhammad Zamri Jusoh, CEO of Sapura Energy, who was appointed two months ago on Jan 13, 2025, tells The Edge in an interview: “Governance-wise we have improved.”

He says he does not consider the RM1.1 billion injection as a bailout. “I still wouldn’t call it a bailout, to be honest with you, because when you talk about bailout, normally it implies a capital injection without really any set conditions or expectations. But in this case, actually there are a lot of things that we need to deliver for us to basically earn this RM1.1 billion. Plus, they have collateral against it. So, if anything happens, they have protection.”

In his first interview since taking the helm, Muhammad Zamri seeks to defend the government’s move of injecting funds into the company (not bailing it out) and explains how the worst is behind Sapura Energy. The following are excerpts from the interview. 

The Edge: What are your thoughts on Prime Minister Datuk Seri Anwar Ibrahim and Minister of Communications Datuk Fahmi Fadzil’s remarks that the capital injection is not a bailout? Can you provide details on the capital injection?

Muhammad Zamri Jusoh: If you don’t mind, I would prefer not to get into the debate about whether this is a bailout or not. Instead, let’s focus on what the RCLS (redeemable convertible loan stocks) is from a structural standpoint.

First, there are options available [in the RCLS]. I should mention here that this RCLS is securitised because it is [backed] by our assets. It is a secure investment [and] throughout the period, they [the government] have the option to redeem it or convert it into shares.

This presents an upside for them [the government] — if the share price improves, they stand to benefit. The whole intent of the RCLS is that, at the end of the day, we will repay them with some upside, based on what we have agreed with them.

Are there any terms related to dividends in the RCLS? If so, what is the rate?

There are some components [related to returns], which is why I referred to it as an upside. Instead of calling it a dividend, we refer to it as a coupon rate.

There is a range for this coupon rate, and I would say it is ‘palatable’ for an investment that is secured. To clarify our earlier comment, in terms of conversion, that [decision lies] with the holder — MDH (Malaysia Development Holding Sdn Bhd) has the right to convert.

Whenever they see an upside in the market, they can convert and realise their gains. From a redemption perspective, the feature is quite flexible — it can be redeemed at any time.

Can you share further details on the coupon rate? Also, what is the ‘palatable’ return on investment?

We have been advised [that the appropriate time to disclose this information] will be when we submit our regularisation plan to Bursa [Malaysia] and present it to our shareholders. At that time, the details will be made available.

While I can give a bit of guidance, we are unable to disclose too much at this juncture. However, I can share that there are two instruments involved. First, the instrument is offered to our scheme creditors in the form of RCuIDS (redeemable convertible unsecured Islamic debt securities) — this carries a 2% paid interest. Second, the RCLS, which we offered to MDH, carries a return coupon rate of 2% minimum — that can be higher.

However, I can share that there are two instruments involved. First, the instrument is offered to our scheme creditors in the form of RCUIDS (redeemable convertible unsecured Islamic debt securities) — this carries a 2% paid interest. Second, the RCLS, which we offered to MDH, carries a return coupon rate of 2% minimum — that can be higher.

Can you explain how this capital injection came about? How did the government become involved?

We initiated this restructuring process about three years ago. At one point, we were looking for an investment of around RM1.8 billion. Throughout that process, we have been talking to certain suitors and parties, both from Malaysia and internationally.

Since then, with improvements in our business, we have basically managed to have sufficient cash flow to at least cover our working capital needs. Initially, of the RM1.8 billion that we talked about, RM1.1 billion was meant for settling debts with our local vendors, while RM700 million was earmarked for working capital.

Our business has been doing quite well after that. We no longer needed that RM700 million because our operations now generate enough working capital from the cash flow.

[But] our focus has always been on the RM1.1 billion needed to settle debts that we owe to our local vendors. In the end, it was really MDH that basically really aligned with the inspiration that we have, and that is how we actually ended up with MDH.

They [MDH] have always been there [throughout the process]. [While] they remained in the background, we were [still] interacting with them. To elaborate further, our objective here to do this [restructuring] was to keep the Malaysian oil and gas ecosystem as a whole. [But] a lot of these other suitors when they came in, they had very different business models [visions or ideas].

They [other suitors] say, ‘Everybody should take a haircut’ because they would like to make sure they maximise their own value [from the investment]. This created a misalignment of objectives. Meanwhile, MDH, though being in the background, continued to have a dialogue [with us].

The fact that we are able to generate sufficient internal cash flow to sustain our operations helped build confidence, as did the fact that we could offer a security package. With the objective that we set for ourselves, slowly we believe that MDH is better suited for our [restructuring] programme.

When exactly did MDH get involved? You say they were in the background. How did that come about?

Their [MDH] involvement became [pronounced] around the time when we filed our second RO (restraining order). Our first RO was in March 2022, which is also when we began searching for a white knight. At that time, we reached out to many people, including obviously MDH.

They [MDH] remained in the background and they were quite happy for us to find other solutions if we could. However, due to the misalignment of objectives [with other suitors], we ended up eventually going with MDH.

Your finance costs for the past nine months were around RM660 million. Can you afford to pay dividends to the government?

No … we cannot pay dividends [under these financial circumstances]. That is why we need to restructure and reduce our debt level.

So the government takes the pledged assets?

The way we have structured the scheme is for the sustainable debt — RM5.2 billion — [to be backed by two revenue streams], which is the drilling business that has secured profitable long-term contracts and another associated investment that generates steady dividend distributions. For the dividend distribution from that investment, these two revenue sources will cover both principal and interest repayments.

Our engineering and construction (E&C) and O&M (operations and maintenance) also have a healthy funnel in the order book. We’re very confident that we’re able to generate the cash to honour our commitment to pay the coupon to MDH.

What are the terms and conditions of the RCLS since the government said it comes with terms? What are the terms?

At the moment, we are under obligation to be a little bit more careful with the terms. So please excuse us because I wish I am able to say more but generally, I can [only] speak in general [terms].

Before they [government] can release the money, we need to get a number of approvals. Before that, they have done a thorough assessment. So, prerequisite, obviously, they have to do a thorough assessment. And even to get the RM1.1 billion, we had to provide them with cash flow projections on whether the business is sustainable.

There were a number of deliberations. Any white knight will need to understand if this business [will be] sustainable. So they did all those assessments beforehand. But even before they release any money, as is typical of any investor, we need to get through number one — we need to get Bursa approval for the regularisation plan because Sapura Energy needs to remain a listed company.

Why that is important is because if they were to convert into shares, that’s one mechanism to be able to get returns. So being listed [is paramount]. Therefore, the regularisation plan needs to be approved by Bursa. There could be other approvals required from shareholders — EGM — that will be required.

Then obviously as part of the scheme, we need to go to court to do a share capital reduction. All that needs to happen before we come to RED (restructuring effective date) and only at RED, once all of this is done, then one of the last steps is when we can basically get the injection of money.

Was PNB aware of what was happening — the search for a white knight and MDH’s involvement? Was PNB involved in this process?

As a major shareholder, PNB was kept informed throughout the process. While they do not have many directors on our board, we updated the board on our restructuring efforts, including our talking to potential people [investors]. That was the extent of PNB’s involvement in this matter.

You had a RM4 billion cash call with PNB in 2019. How was that money used? Even after that you have now secured RM1.1 billion from MDH, which is for vendor payments, what happened to the earlier funds? How much more do you need to remain afloat?

At the time [of the cash call], our total debt level stood at about RM17 billion. Almost the entire proceeds that we received from PNB — the RM4 billion was used to pay down a portion of that debt. Our debt level has since gone down from RM17 billion to about RM10.8 billion today.

Now that the debt has been reduced to RM10.8 billion, is it manageable now? What are the next steps in your restructuring plan?

No, it is not sustainable. If you look at our finance costs, [they remain very high], ranging from RM700 million to RM800 million [annually]. That is the crux of the issue we are facing.

The RM1.1 billion for vendors actually forms an essential part of our restructuring plan. But the restructuring plan [that we are] talking about is the whole debt. So how do we restructure the remaining debt?

First, we have to remember that the SapuraOMV deal [sale] is sealed. The proceeds from the sale of SapuraOMV will go towards paying a portion of our debt. Then, we also have a certain amount of debt that will be converted into shares.

Of the RM10.8 billion [outstanding debt] that we talked about, we will carry with us RM5.2 billion as a sustainable debt, serviced through our two most profitable businesses: drilling operations and our Brazil JV (joint venture). Our lenders also agreed to take a haircut up to about 7%.

Can you further elaborate on the haircut that each of your creditors is taking?

Our creditors fall into two classes: preferred unsecured creditors and unsecured creditors. The preferred unsecured creditors are predominantly our Malaysian ecosystem lenders and local creditors. There is no haircut [for this group] — they will receive full repayment [dollar for dollar] within 90 days after the RED from the drawdown of the RM1.1 billion allocation.

[On the other hand,] the unsecured creditors predominantly are lenders — mostly banks, and some foreign creditors. Their restructuring is divided into different functions. Some actually paid by cash, [sourced] from the disposal of SapuraOMV — that is, RM2.25 billion.

Then for the remaining RM5.2 billion, [it] will be converted into long-term sustainable debt for an eight-year tenor with a fixed interest rate of 4.5%. The previous floating interest rates fluctuated [leading to finance costs of RM700 million to RM800 million per year]. With the new structure, we de-risk interest rate exposure so the finance costs will be significantly lower — estimated at RM250 million annually.

On the preferred unsecured debt, the Malaysian creditors receive no haircut. What about the bankers?

Yes … the restructuring plan reduces total debt from RM10.7 billion to RM5.2 billion, which includes a direct haircut of 7.05% for lenders. The lenders [mostly banks] will take a 7.05% haircut on their principal. This is a direct waiver amounting to approximately RM780 million.

Over the past three years [from Jan 31, 2022 to the RED], interest expenses have accrued but remain unpaid. These interest costs — amounting to over RM1 billion — will be waived. While this is still booked for accounting purposes, it will be reversed upon RED.

The RCUIDS amounting to RM1.8 billion is issued at a premium. This inherently creates a discount element, effectively adding another 7% haircut. In total, this results in an additional RM1.5 billion in indirect haircut.

So while the 7.05% direct haircut applies only to lenders, the broader restructuring plan also includes foreign creditors and certain clients impacted by past toxic contracts. The preferred unsecured creditors remain unaffected, meaning they receive full repayment under the plan.

If we break it down, RM5.2 billion will be carried forward. What about the remaining RM4 billion? (The RM1.1 billion for vendors is actually reflected as part of trade payables on Sapura Energy’s books.)

Of the RM10.8 billion [in outstanding debt], RM5.2 billion will be carried forward [or is to be] retained as sustainable debt, RM2.25 billion will be repaid using proceeds from the SapuraOMV sale — this cash is already with us and will be used to repay lenders immediately after the restructuring’s effective date. The remaining sum of about RM1.8 billion is converted into RCUIDS — it is an unsecured debt and RM1 billion will be settled through the issuance of new shares.

Do your creditors support this restructuring plan?

For the restructuring to proceed, we needed to hold a court-convened meeting as part of the scheme. This was a complex process involving 23 entities within the group, each with different creditor classes, such as preferred unsecured creditors, unsecured creditors and intercompany creditors.

There were 52 meetings that needed to be held, and we needed at least 75% creditor approval in each meeting. Of these, we secured 100% approval in 44 meetings, and the remaining eight meetings, over 95% of creditors voted in favour. It is overwhelming that we already got an approval from the scheme creditor, which includes the lenders and all the other scheme creditors. In short, yes — we got a good response with this.

Among your 2,000+ vendors, can we get a list of the top 10? Are there any related-party transactions?

I can name you three [related parties], all of which are disclosed to the board and relevant authorities. The three are Sapura Holdings Sdn Bhd, Sapura Resources Bhd (KL:SAPRES) and Sapura Mines Property (Mines Complex) …

We just moved from The Mines — Sapura Resources owns the Mines Complex, which we previously occupied. We paid rental fees and actually we owe them rent also. To be fair, these are genuine business transactions as they also provide us services, including security access and other operational needs.

Now that the restructuring is in place, what about the business itself?

To look at this, we entered into restructuring in FY2022, which corresponds to January 2022 [calendar year 2021]. While the refinancing efforts took place in that year [2022], the effects of the restructuring were felt later [2023].

The most important thing is that when a company undergoes restructuring, [it faces] a lot of struggle — no bank guarantees, no LCs (letters of credit) and no working capital facilities.

Then, we need to think about keeping the revenue stable — we must keep it at more than RM4 billion, which means we need to constantly work on our order book — and [fortunately] our revenue didn’t collapse.

From an Ebitda (earnings before interest, taxes, depreciation and amortisation) perspective, [our numbers] have gone green [or moved back into positive territory]. Only during post-Covid, we had toxic contracts but we already made a provision for losses for some of those contracts — these issues have now been addressed. Our Ebitda for the latest financial year stands at RM390 million for the first nine months.

Patmi (net profit after tax and minority interests), however, remains in the red because we carry RM800 million [in annual] interest cost. That alone prevents us from paying dividends, as the math simply doesn’t work — we cannot work it out or have a business of RM4 billion while carrying RM800 million in finance costs.

Now, what is important is we changed our way of working — it is no longer [focused on] top-line revenue growth. But for this business, we need to look at cash flow like a hawk. [Previously] while revenue [might have been] RM6 billion, free cash flow remained stuck in the system. Since restructuring, we have changed the way we think. Now, all is about cash.

Even if we do projects, the question is ‘Is it cash-neutral?’ We no longer enter into projects that require us to finance our clients — we are not a bank. You can see there have been significant improvements in our free cash flow.

In terms of order book, in FY2020, our order book that we kept was around RM3 billion. As at our last quarterly report, it had grown to RM6 billion. With our latest project wins, including a RM3.2 billion drilling contract, our current order book stands at RM8.7 billion — the highest in the past five years.

Now, there is a bit of change [in] the composition of the order book. [Currently], there are three main businesses — engineering and construction (E&C), [which refers to] the contractors that build platforms, lay pipelines and handle maintenance. [Next] is the drilling that operates rigs on a day-rate basis [and the last one] is maintenance and services — our ongoing operational support.

[Previously], the E&C segment carried higher risks because contracts were structured as lump-sum agreements, meaning we take most of the [financial] risk. [In contrast], our drilling and services businesses operate more on a day-rate or reimbursable contracts [which are more stable].

[Looking at this], we need to break this up to de-risk our order book as previously we lumped these two businesses together — we broke this up in FY2022. The proposition that we have now is less risky with the day-rate contracts increasing to 68% to 70% of our order book versus E&C. Even with E&C, we have moved away from EPCIC (engineering, procurement, construction, installation and commissioning) lump-sum projects — no more EPCIC contracts.

Now, our focus is the T&I (transport and installation) contracts. We don’t take lump sum [contracts]. So in a sense, with this profile, it is less risky. So that’s how we’re changing our business model.

What would you say caused this mess in Sapura Energy?

Earlier, we alluded to this when discussing the risk appetite we had at the time. We pursued large EPCIC contracts, where we took on significant risks, with payments typically made at the end of the project. This created a lot of exposure as far as capital is concerned. Another major factor was Covid-19, which severely impacted operations. At that time, we were still carrying out some large EPCIC contracts, and the pandemic made it operationally difficult because we could not do jobs essentially, but our assets were out there … So literally, we were burning cash and our clients were not recognising this cost that we were basically carrying. There’s a lot of dispute also in that respect. Then, restricted access to working capital further constrained our ability to make payments … So it’s a multitude of issues, I would say.

The other elephant in the room is obviously the cash flow that keeps being sucked out. If they suck the cash out, then operationally, you will be deprived of cash to be able to carry out the work.

Another thing probably, while Sapura owns assets, we do not own all the assets required for our projects. So we have to say our main pipe laying vessel, we go out there but we have to hire a lot of tugboats, supply vessels and all that.

This marine spread must be mobilised and ready, and many of these are contractor-owned assets, which is why we owe money to these vendors.

During the Covid-19 Movement Control Order, jurisdictions such as Brunei, Malaysia, Taiwan and everywhere else imposed restrictions. We were stuck but all our subcontractors were saying, ‘Sapura, you are the main contractor. Your problem is not our problem — pay our bills.’

At the same time, we turned to our clients, explaining that our subcontractors were demanding payment. But since we operate on a lump-sum model while subcontractors are on a daily-rate model, it created a fundamental mismatch in payment obligations. Inherently, we are not alone in this issue. Look at our peers, everybody is in the same boat.

What are the assets being used as security for MDH, and what is their value?

Generally, I think it’s the main assets in our E&C business. These are the big installation vessels, pipe laying vessels. [In terms of value] again, I’m speaking in general because I don’t want to be too specific.

What’s the value of the assets?

So there’s a normal market value and fire sale value, right? So even at the fire sale valuation done by an independent party, it is still more than the RM1.1 billion investment.

Is there any government representative who will come on board at Sapura Energy?

If you look at the size of the investment from MDH, in this case then I would say I’m pretty sure that they would want to have oversight of Sapura Energy. Probably, they will not be involved in the day-to-day running of the business itself.

Do you think you need more cash injection after this?

I think we are on a good footing right now. If you look at our model today, we are moving away from all these risky, lump-sum [payment] businesses. We are going for reimbursable day rates, so lower risk.

And I think one of the other things that we are injecting into the company today is really to look at the bottom line as well as cash flow. So we really peel each of these businesses so that it is very, very visible for us. I think that is one of the disciplines that we are instilling right now.

I think this is really a period where we really want to hunker down, focus on delivering our projects as well as looking at our operational efficiencies. I think geography-wise, we have also made a consistent decision that we wanted to. I would say retreat or consolidate and focus more on the Asia-Pacific region.

So we will not spread ourselves across the globe. Brazil is another matter, because there’s a long-term contract. It is generating a lot of cash, day rate and is locally managed. But as far as chasing new projects [is concerned], I think we’re focusing a lot more on this region.

So in the medium term, you would probably see some erosion to our top line, but the top line is not our concern today. We hope with our improvement in operational efficiencies then you know we will improve our margins, we will improve our Ebitda and we’ll have enough cash then basically to sustain our business without really going out and asking for additional cash. So one big difference is we took a holistic effort to restructure our balance sheet.

What would you say caused the unsustainable debt? Now that you have restructured the balance sheet, what went wrong?

This group grew inorganically through quite substantial mergers and acquisitions, and we did so by gearing up the balance sheet to the tune of RM17 billion. And if you remember, probably between 2014 and 2016, the term called ‘lower for longer’ sprouted up in the oil and gas industry, when the oil price crashed and stayed low for that period of time. All our clients cut back on capex.

As a result, there was a vacuum in the market, whereby we had a lot of assets. Our competitors as well were in the same [situation] and we needed jobs to keep our assets running. At the same time, the clients were also saying they were in a lower-for-longer [oil price phase], and they needed to push the risk to the contractor through lump-sum EPCIC contracts.

So, these two potent factors coming together [resulted in us] competing among ourselves. [Even with] thin margins we [accepted] because we have employees to pay and assets to keep running.

Basically, in simple terms, what we bought in the past with borrowings, thinking that it would give us good returns, it didn’t materialise ... So, about RM17 billion impairment [was undertaken]. It’s huge. So that in a way is how it went wrong, because of gearing up the balance sheet, and then the assets that we acquired were not generating enough returns as expected. Then the final straw was Covid-19. When it hit us, we couldn’t recover. The difference now is that we’re no longer kicking the can down the road.

Are you still paying to use the name Sapura?

We have stopped in the last few years.

Is there a contractual obligation to continue paying?

There’s always this IP agreement, I don’t deny that, but the IP agreement requires both parties to sit down and agree on a rate. So obviously from our perspective, we think you know we shouldn’t be paying.

There was a time when the salaries of some of your key people were very high. To use the names Sapura and Kencana even, you had to pay RM70 million or thereabouts. So now, when you’re in this predicament, you ask for taxpayers’ money for a bailout … So, it won’t be a very popular decision.

We can only look forward. Right now, we are trying to do the best that we can to fix some of the past issues that we have. We think, you know we have the formula to do this.

Are your lenders also telling you that you should ask for more from the government so they can get paid also?

I think we have to be very prudent in that sense that you know what we set out to do is basically to repay our local vendors. We stop at that. That’s why we spent the hardest time of our lives negotiating with the lenders. It is not easy, but we are also thankful that at the end of the day, they supported this.

A lot of the other oil and gas companies like Bumi Armada Bhd (KL:ARMADA) and Yinson Holdings Bhd (KL:YINSON) have recovered, but Sapura Energy hasn’t. Is there any particular reason?

It all comes down to debt. Also, the nature of the business, actually.

How many per cent will MDH own if they decide to fully convert their RCLS?

They are putting in RM1.1 billion. Our market cap at the moment is around RM700 million. So, I think, without going into the details, it will be substantial if they convert. If it’s redeemed, then it will be less, as they will get cash.

How much cash?

If they fully redeem, they get RM1.1 billion.

Was the plan presented to substantial shareholder Sapura Holdings Sdn Bhd?

To be completely transparent, they do have representation on the board. So, whatever we do, for full transparency, we go to the board. The board reps are in there, deliberating, you know, seeing all this. So far, whatever we propose, we seem to be able to get their buy-in.

You got their buy-in, but they are not buying in?

So what I mean by buying in is that I say, ‘Okay, this is the offer we would like to get the board to approve’ so that we can approach the creditors.

Why are they not putting in money to save Sapura Energy?

We cannot speak on behalf of them.

PNB [Permodalan Nasional Bhd, 44% shareholder of Sapura Energy] has said they are not going to put in any more money. So you don’t need any more capital injection or anything like that?

Based on what we projected today, we don’t need.

So your debt will be RM5.2 billion from RM10.87 billion. That is quite a substantial reduction.

More than 50%, and it is a fixed rate 4.5% interest. So it is a reduction in principal and the interest rate is also lower. It’s just that we need to fix the balance sheet so the P&L can work.

So, your finance cost will be reduced to how much?

Around RM200 million-plus.

It’s a huge reduction from RM800 million.

Oh yes, of course, because once the principal drops, the interest also drops. So, it is designed to make this a sustainable business.

How did you manage to convince your lenders to cut your debt by so much? What was the selling point?

Bankers are bankers ... They know whether this is something that we can continue to bank on. And there are nine of them. They employ specialist financial advisers to advise them, so they went through our books. They looked at our order book, they challenged everything, our cash flow, everything.

They looked at our contracts even. So they went in and looked, they deep dived into the business. I feel that they believe that keeping Sapura Energy as a going concern would give them more value than liquidation.

They started off having that so-called managed sale as a potential option … Sapura Energy is asset-rich, right? If we were to sell, how much would they get? If they keep Sapura Energy alive, how much would they get?

[Banks would have been sceptical.] There’s a little bit of, ‘Can I trust you?’ For example, in March 2021, we signed refinancing. Six months later, the triggered default. So, there was a lot of trust lost in the process. And it took them quite a while to. Slowly, we are honouring our promises one by one.

Had MDH refused to come up with this RM1.1 billion, would there have been a Plan B?

We never had a so-called Plan B per se … if you ask me now, Plan B will be more severe cuts. So that’s why this RM1.1 billion people ask, is it helping Sapura Energy or helping vendors, who is benefiting? I would say this RM1.1 billion, the direct beneficiaries, of course, are the vendors because they’re getting the cash. But then Sapura Energy, ourselves, is also able to be a going concern, right?

I know that you say MDH gets security, but why would the government need the assets anyway?

So, if let’s say in an unfortunate circumstance, if we go into liquidation then the liquidator will need to dispose of the assets. So, the first pot goes to the secured creditors … which one’s got security? MDH.

We are paying them a coupon — where possible, redeem — and they can decide if they can find opportunities by converting into shares and monetising it. That’s the option given to them.

So there are even upsides for them if things go well. But if all things go bad, there’s protection.

See also “Sapura Energy: A case of throwing good money after bad” on Page 48

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