Sapura Energy Berhad posted RM8.9 billion loss after taxation and minority interests (LATAMI) for the financial year ended 31 January 2022 (FY2022). The Group announced that it also recorded an operating loss of RM2.2 billion on the back of RM4.1 billion revenue. The Group recognised a RM3.3 billion provision for impairment on goodwill on consolidation and a RM2.3 billion provision for impairment on property, plant and equipment in FY 2022.
Its FY 2022 revenue of RM4.1 billion was 22.8 percent lower than the RM5.3 billion recorded in financial year 2021 (‘FY 2021”) primarily due to lower contributions from the Engineering & Construction (E&C) segment.
5-Year Group Financial Highlights
Source: Sapura
Energy Berhad Annual Report 2021
The Group has embarked on a series of negotiations with clients on legacy contracts for amicable solutions to recover or limit losses.
To address its unsustainable debt and settle outstanding claims to vendors, Sapura Energy successfully applied for and was granted two Orders by the High Court of Malaya, which allows it to begin a court - sanctioned debt restructuring exercise with creditors. The Orders, which include a Restraining Order, will help create a stable platform for the Group to negotiate with creditors while its operations can continue.
Sapura Energy is in talks with lenders to restructure its long-term debt and will begin scheme of arrangement briefings soon. The Group is also seeking sources of new funds to finance its business plan as it restructures its business and streamlines its operations.
In FY 2023 revenue from secured projects attributable to legacy contracts will be reduced to about 25 percent. With an average of nine rigs expected to be in operation in FY 2023 compared to an average of seven in FY 2022, its Drilling segment will continue to generate stable cash flow under better market conditions.
Najib Razak has urged the government to protect Sapura Energy Bhd from bankruptcy by providing loans or instructing Petronas or Khazanah Nasional to take over ownership from Permodalan Nasional Bhd (PNB). The former prime minister was critical of PNB for failing to take action. Najib also said nearly 10,000 high-paying jobs would be lost and around 4,500 vendors or suppliers would be affected. He urged the government to act immediately by providing easy interest loans or loan guarantees to Sapura to solve its cash flow problems. Alternatively, he said, the government could direct Petronas or Khazanah Nasional Bhd to take over ownership of Sapura.
Although PNB conducted a reshuffling of Sapura’s management in early 2021, Najib said PNB no longer wanted to help the company with a new loan but instructed Sapura to dispose of its assets to solve its cash flow problem.
What is Najib’s problem? Did Shahril (and the former team) run the Company to the ground? Banks are not in favour of them, PNB is against them, Khazanah is not interested. So, where does Sharil go to? Government? Najib? Perhaps Najib could advance USD756m from his loot to meet cash flow until he becomes the next PM?
References:
Sapura Energy posts RM8.9bil loss, reviews biz direction, Azreen Hani,
https://themalaysianreserve.com
Protect Sapura from bankruptcy, urges Najib, FMT Reporters, 20 March 2022
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