CEO Mohd Anuar is “quite confident” the approval-in-principle would help Sapura Energy approach the last few milestones of the debt restructuring.
PETALING JAYA: Debt-laden Sapura Energy Bhd
finds temporary relief after the majority of creditors gave approval-in-principle to restructure its RM10.3bil debt.
This, however, does not provide a guarantee that the debt would eventually be restructured. It merely paved the way for court-convened meetings with creditors for further deliberations.
Should creditors disagree on the terms of debt restructuring, the oil and gas service provider will be at risk of collapse.
Chief executive officer Datuk Mohd Anuar Taib is, however, “quite confident” that the approval-in-principle would help Sapura Energy approach the last few milestones of the debt restructuring.
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”.
The RM10.3bil debt that Sapura Energy aims to restructure includes about RM1.5bil in claims from vendors, among which are Malaysian small and medium enterprises.
In a statement yesterday, the group said it has received written confirmation from the Corporate Debt Restructuring Committee (CDRC) that at least 75% of the financiers for the RM10.3bil multi-currency financing facilities (MCF financiers) have provided the requisite approval-in-principle for a proposed debt restructuring scheme.
“The confirmation marks a significant milestone in Sapura Energy’s reset plan, which includes efforts to address its unsustainable level of debt and amounts owed to trade creditors.
“The achievement reflects the company’s commitment to formulating a fair and equitable solution for all its stakeholders, particularly Malaysian vendors who are small and medium enterprises,” it said.
According to Mohd Anuar, Sapura Energy will continue working with the MCF financiers and the CDRC to achieve successful closure of this debt restructuring.
“This approval-in-principle is indeed a positive step towards regularising our financial position, ultimately helping Sapura Energy exit from its status as a Practice Note 17 company.”
Since September 2022, Sapura Energy and the MCF financiers have been engaged in CDRC-mediated negotiations to reach an accord on the proposed debt restructuring.
The approval-in-principle paves the way for court-convened meetings with the relevant classes of creditors of Sapura Energy and its relevant subsidiaries.
As of end-July 2023, Sapura Energy had a total of RM10.82bil short-term borrowings, which was the biggest chunk of its liabilities.
The group’s total liabilities stood at RM16.42bil, well surpassing its total assets of RM13.4bil. This means that for every RM1 in assets, Sapura Energy has RM1.22 in liabilities.
“The board of directors and senior management of Sapura Energy extend their appreciation to the members of the CDRC for their invaluable guidance and professionalism during the mediation process.
“We are also grateful to the MCF financiers for their continued support for Sapura Energy.
“We also wish to record our special acknowledgment to our advisers PricewaterhouseCoopers Advisory Services Sdn Bhd, Sage 3, Saheran Suhendran, Rahmat Lim & Partners, Kirkland & Ellis, Malaysian Industrial Development Finance Bhd, and Albar & Partners, as well as the advisers to the MCF financiers including Kroll, Wong & Partners and Mayer Brown.
“Their collaboration, strategic insights and commitment were instrumental in achieving this accomplishment,” stated Mohd Anuar.
He also acknowledged Sapura Energy’s clients and vendors who had maintained their confidence in the group throughout this challenging period.
“Given the hurdles we faced, it’s understandable that not everyone could give us their backing.
“Hence, we are immensely grateful to the valued partners who have consistently demonstrated their unwavering support,” Mohd Anuar remarked.
In a separate filing, Sapura Energy said it posted a net profit of RM30.89mil for the third quarter ended Oct 31, 2023, from RM10.18mil in the same quarter in 2022.
Basic earnings per share rose to 0.19 sen from 0.06 sen previously.
The group reported revenue of RM1.1bil, down from RM1.28bil in the previous comparative quarter, due to lower contribution from its engineering and construction (E&C) business segment from a lower percentage of completion of projects executed.
Cumulatively, the group’s net profit over three quarters came to RM219.78mil, up from RM99.53mil in the same period in 2022, while revenue was RM3.2bil, down from RM3.33bil in the comparative period.
It said order book currently stands at RM5.4bil, with both E&C and operations and maintenance segments actively pursuing prospects within and outside of Malaysia.
