MOF injects RM1.1 bil to settle Sapura Energy's debts
KUALA LUMPUR (March 11): Debt-laden Sapura Energy Bhd (KL:SAPNRG) has received a lifeline in the form of a RM1.1 billion investment from the Minister of Finance (Inc) through its special purpose vehicle Malaysia Development Holding Sdn Bhd (MDH).
In a filing with Bursa Malaysia on Tuesday, Sapura Energy said MDH will be subscribing 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.
“As a Malaysian company supporting over 2,000 local vendors, we recognise our responsibility to preserve the Malaysian oil and gas (O&G) ecosystem. Our Malaysian vendors are predominantly small and medium enterprises (SMEs) who have endured significant financial hardship during and after the Covid-19 pandemic and it had always been our intention to fully settle overdue payables to them,” said Sapura Energy group chief executive officer Muhammad Zamri Jusoh.
“We are extremely grateful to MDH for providing this funding, which will allow us to fulfil our commitment to our Malaysian vendors,” he added.
In an interview with The Edge last month, Permodalan Nasional Bhd (PNB) president and group chief executive Datuk Abdul Rahman Ahmad said that the government-linked investment company, which invested RM2.68 billion in Sapura Energy back in 2018, is constrained to inject further capital into the company.
"For prudence, we have a single company investment limit that varies from company to company. We are constrained on that, and we don’t want to exceed our investment guard rails on an investment in a company," he said when asked if PNB would consider injecting more capital into Sapura Energy.
In 2018, Sapura Energy undertook a massive recapitalisation exercise involving rights issue of shares and Islamic redeemable convertible preference shares (RCPS-i) to raise RM4 billion, which saw PNB came to its rescue by forking out RM2.68 billion and emerged as a single largest shareholder with a 44.13% stake.
According to Bursa Malaysia, convertible loan stocks carry the right to be converted into ordinary shares of the company on pre-arranged terms and within a limited period. "The objective of issuing a convertible loan stock is to obtain fixed interest finance at a relatively low rate of interest and at the same time make it attractive to potential holders by the offer of equity participation at a later date," the regulator stated on its website.
It is noteworthy that former prime minister Datuk Seri Najib Razak had in 2022 urged the government to bail out Sapura Energy, pointing out that the group “belongs to all Malaysians”.
In court documents sighted by The Edge in 2023, Sapura Energy said it had received a “formal letter from a white knight” that indicated it would provide financial support to the company. It stated that the white knight would be an “integral part” of its restructuring that would see a capital injection of up to RM1.8 billion into the Sapura group through a subscription of redeemable convertible loan stock.
Last month, Sapura Energy, a Practice Note 17 (PN17) company, secured its creditors' approval for its proposed debt restructuring scheme involving Sapura Energy and its 22 subsidiaries to address RM10.8 billion owed to nine lenders of its multi-currency financing facilities and RM1.5 billion in outstanding trade creditor payments.
Following that, Sapura Energy also obtained the court's approval last Thursday for the debt restructuring plan.
The funding and court-approved debt restructuring plan form part of Sapura Energy’s regularisation plan, as the company works to exit its PN17 status and reposition itself for long-term growth.
“We are diligently working on a robust regularisation plan, which will bring us one step closer to exiting our status as a PN17 company,” Zamri said.
“We see Sapura Energy’s turnaround as part of the revitalisation of the Malaysian OGSE (oil and gas services and equipment) sector, ensuring it is better positioned to support the nation’s energy security and sustainability goals, ultimately contributing to Malaysia’s economic development,” he added.
Shares of Sapura Energy closed unchanged at 3.5 sen on Tuesday, with a market capitalisation of RM643.2 million.
For the first nine months of FY2025, Sapura Energy posted a net loss of RM342.96 million, compared to a net profit of RM213.18 million a year before, while revenue increased 10.6% to RM3.54 billion from RM3.2 billion.
As at end-October 2024, the group’s borrowings stood at RM10.73 billion. Trade and other payables totalled RM5.18 billion, while cash, deposits and bank balances stood at RM1.79 billion. Its accumulated losses increased slightly to RM17.53 billion from RM17.24 billion.
The group’s order book currently stands at RM6 billion, while its joint ventures hold an additional RM5.8 billion.
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