PETALING JAYA: Sapura Energy Bhd, which saw its share price hit an all-time low of 37 sen last Friday on plans for a rights issue to raise RM 4 billion, is banking on substantial shareholders to make the fundraising exercise a success.
It has secured letters of support from Sapura Technology Sdn Bhd and Permodalan Nasional Bhd (PNB).
Sapura Technology, a direct shareholder of Sapura Energy with a 16% stake, has expressed its intent to participate in the rights issue for a minimum amount of RM300 million.
PNB, which owns interest in Sapura Energy through its various funds, will subscribe to its entitlement and is looking at taking up excess shares up to an agreed amount to be determined later.
The only other substantial shareholder listed in the group’s latest annual report is Kumpulan Wang Persaraan (Diperbadankan), which owns a 6.85% stake in Sapura Energy.
The Employees Provident Fund, which recently criticised the pay package of Sapura Energy president and group CEO Tan Sri Shahril Shamsuddin and voted against his re-election to the board, is no longer a substantial shareholder in the group.
Meanwhile, Sapura Energy said the rights issue is part of a broader strategic plan to strengthen the group’s core businesses, boost its financial position and create better value for its shareholders.
At the end of trading on Friday, it trimmed its losses to settle at 41.5 sen on 484.1 million shares done.
In a filing with the stock exchange, the group said it is evaluating various options, which may involve the listing of its exploration and production (E&P) business and exploring a possible strategic partnership for its drilling business.
Up to RM3 billion will be raised through the rights issue exercise with free warrants and up to RM1 billion through the rights issue of Islamic redeemable convertible preference shares.
The proposed rights issue of shares with warrants entails the issuance of up to 9.99 billion rights shares at an issue price of 30 sen per rights share together with up to 998.69 million free warrants, on the basis of five rights shares for every three Sapura Energy shares held and one free warrant for every 10 rights shares subscribed.
Bernama quoted Credit Suisse as saying that while the highly dilutive exercise might seem negative on the surface, it believes it is necessary and will place Sapura Energy in a much better position to secure new higher-quality contracts (demand for services is clearly on an uptrend) in the sector’s upcycle.
“We believe longer term shareholders will be rewarded as Sapura Energy monetises its exploration and production (E&P) assets and secures more new profitable contracts, ” it said.
Credit Suisse believes that if Sapura Energy successfully raises RM4 billion, it would save RM184 million a year in interest and return to the black in financial year 2020, even without any new contract wins.
Source: The Sun Daily