KUALA LUMPUR (May 14): Upstream oil and gas contractor Sapura Energy Bhd (KL:SAPNRG) has revealed its proposed regularisation plan to exit its Practice Note 17 (PN17) status, which could see the Ministry of Finance (MOF) owning up to 33% in the company following its proposed RM1.1 billion capital injection in March.
The proposed regularisation plan also entails a 99.99% capital reduction together with a debt restructuring to nearly halve its total borrowings to just over RM5 billion.
The MOF, through Malaysia Development Holding Sdn Bhd (MDH), in March agreed to subscribe to RM1.1 billion worth of redeemable convertible loan stocks (RCLS) in Sapura Energy to fund its repayment to vendors.
“MDH will become a major shareholder upon full conversion of the RCLS, which will result in MDH holding more than 33% of Sapura Energy’s enlarged share capital,” it said in a statement.
That would make MDH the largest shareholder in Sapura Energy, ahead of Permodalan Nasional Bhd (PNB), whose stake would be reduced to just over 5% upon conclusion of the entire exercise. MDH will seek exemption from being required to make a mandatory general offer, Sapura Energy said.
The group said the regularisation plan seeks to resolve its total borrowings plus trade liabilities of RM12.1 billion, of which RM10.8 billion are total borrowings, and to “return the group to profitability and restore confidence among stakeholders”, said group chief executive officer Muhammad Zamri Jusoh.
The final plan will "be submitted soon”, said Sapura Energy, and includes several mechanisms, such as debt conversions to equity, and equity-like instruments and a debt waiver.
Of the RM12.1 billion, the restructured debt and liabilities will be reduced to RM5.23 billion. Of the balance, RM784 million will be waived, RM2.25 billion will be paid off using proceeds from Sapura Energy’s stake sale in its exploration and production unit, RM1.1 billion will be settled via new Sapura Energy shares, while another RM1.77 billion will be resolved via the issuance of debt securities.
The debt restructuring could slash finance costs by RM517 million or nearly 60% to RM322.3 million from RM863.5 million in the 12 months ended Jan 31, 2025.
The RM5.23 billion debt will then be repaid with earnings from Sapura Energy's drilling business, and its joint venture in Brazil where all six of its pipelay support vessels are operating under long-term contracts.
The capital reduction sees Sapura Energy’s share capital slashed from around RM12 billion to just over RM1 million. This is followed by a 20-to-one share consolidation exercise, which will reduce its share base to between 919 million and 1.01 billion.
On the debt securities, they will be issued at RM1.20 apiece, with an estimated annual coupon rate of 2% and a tenure of eight years. Operationally, Sapura Energy said it is doing away with end-to-end engineering, procurement, construction, installation and commissioning contracts that overlook cost fluctuations and idling of contract-dedicated assets.
Instead, it now focuses on shorter, specialised sub-segment contracts to reduce risks of cost overruns and increase asset utilisation, as well as expanding into new segments such as decommissioning.
The entire exercise will slash Amanah Saham Bumiputera’s (ASB) direct stake in Sapura Energy to under 15%, from 36.97%. ASB is the primary fund managed by PNB. That stake could fall further to 5.36% under the maximum scenario and should MDH emerge as the group's largest shareholder.
Sapura Energy’s former president and group CEO Tan Sri Shahril Shamsuddin and his brother Datuk Shahriman Shamsuddin will collectively hold less than 5% in the company. The duo currently hold an indirect stake of 11.25% via Brothers Capital Sdn Bhd, aside from another 0.95% direct stake held by Shahril.
Under the maximum scenario where all convertible securities are converted into ordinary shares, three banks will hold substantial stakes in Sapura Energy, namely Maybank Islamic Bhd (16.31%), CIMB Bank Bhd (7.37 %) and RHB Islamic Bank Bhd (5.8%).
“We are hopeful that this plan will not only enable Sapura Energy’s recovery but also catalyse the growth of the country’s energy ecosystem,” Muhammad Zamri said.
Shares of Sapura Energy traded unchanged at 4.5 sen at the time of writing on Wednesday, valuing the group at RM726.92 million.