The Morphing Of Sapura Energy S Rm1 1b Lifeline Extension Into Madani Style Strategic Investment

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MAYBE a “bailout” should not be perceived as a disgusting corporate vocabulary after all. There is little need to creatively justify a corporate exercise to save a business from the brink of collapsing or becoming insolvent in any other way.
Just call a bailout a bailout like how a spade should be addressed as a spade. Plain simple.
Forget about “the dropping of water face” – just bite the bullet or take the bull by the horns for treating the informed public as fools by attempting to creatively re-define a “bailout” in any other form will only invite backlash which at the end of the day is more embarrassing than to be truthful at the outset.
This comes as financially-savvy Malaysians are still at odds with the Madani government even as government spokesman Datuk Fahmi Fadzil has come out into the open to defend the Madani administration’s RM1.1 bil injection into cash-strapped Sapura Energy Bhd as “strategic investment”.

Not only that but the Communications Minister went a step further to draw comparison between the Madani-styled “strategic investment” from bailout exercises executed during the “Tun Dr Mahathir Mohamad’s era”.

Elaborating further, Fahmi contended that the government does not view the investment in the form of redeemable convertible loan stocks (RCLS).as a bailout as it was made with specific conditions.
“Among the conditions is for this fund to be used to pay off arrears and money owed by Sapura Energy to over 2,000 vendors, 80% of whom are Bumiputera,” he justified at a media conference in his Putrajaya office yesterday (March 12).
“The government – as a general rule – will look into it case by case but we will practice the principle of ‘there is no free lunch’. This is not free money.”
Meanwhile, Permodalan Nasional Bhd (PNB) which is Sapura Energy’s largest shareholder (44.13% stake) deemed that facilitating the completion one of the largest corporate and debt restructuring in Malaysia is critical to prevent Sapura Energy’s liquidation which would result in the fire sale of strategic national oil and gas assets – both domestically and globally.

“Investment in Sapura Energy by Malaysia Development Holdings Sdn Bhd (a special purpose vehicle of the Minister of Finance Inc) will be exclusively used to repay local vendors without benefiting any existing shareholders or financial creditors,” clarified PNB in a statement.
“This funding is crucial for the financial survivability of Malaysian service providers within the oil and gas (O&G) ecosystem given Sapura Energy has more than 2,000 vendors, many of which are SMEs as well as employ about 59,000 core employees in the O&G industry.”
PNB had back in 2018 invested RM2.68 bil in Sapura Energy with its accumulated capital having reached the RM4 bil ceiling, hence preventing the government-linked investment fund (GLIC) to further increase its fund injection into the debt-laden entity.
The currently PN17 (Practice Note 17) has in recent times obtained both its creditors and court approvals to undertake a debt recovery plan involving RM10.8 bil in bank debt and RM1.5 bil in vendor debt.
Despite incurring a net loss of RM216.16 mil in the first nine months of its FY1/2025 (9M FY1/2024: +RM219.78 mil), Sapura Energy saw its revenue rose 10.6% to RM3.54 bil (9M FY1/2024: RM3.2 bil).
The group’s order book currently stands at RM6 bil while its joint ventures hold an additional RM5.8 bil.
At the close of yesterday’s trading, Sapura Energy was up 0.5 sen or 14.29% to 4 sen with 183.64 million shares traded, thus valuing the company at RM735 mil. – Focus Malaysia

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