Sapura had total debts of RM16 billion at one point. It has since reduced this to about RM10 billion. This was largely after an injection of RM4 billion by PNB in 2019. The debt load is still too hefty for it to survive.
Under a debt restructuring plan, the 9-10 banks who are owed a total of RM10.3 billion are asked to take a 75% haircut. The banks seemingly exposed to Sapura include: Maybank, CIMB, AmBank, RHB, UOB, Exim Bank, ING Bank, Sumitomo, Standard Chartered and First Abu Dhabi Bank.
How did it get to this?
Source:
https://en.wikipedia.org
The question is not whether you can win bids but whether you can mitigate risks for delivery of the services. It is not the bid or order book that matters but onerous difficult terms to deliver. Foreign markets, unfamiliar customers and difficult environment are all cited as the reasons for its huge losses.
So, what can it do?
Divest assets; re-negotiate contracts; negotiate haircuts with creditors; and secure a new strategic investor with cash injection for new projects. All of these are not easy but the new Board/Management are capable to put things in better shape.
Almost all the O&G service providers were over-geared and suffered losses when the crash of 2014 took place. Many had sought help of CDRC while some did not survive e.g. Perisai Petroleum.
None of the reasons cited by a politician merit Government intervention. But then there is PNB! So, it may warrant a re-look at some support level on a sustainable debt level going forward, i.e. a Danajamin guarantee for the proposed restructured debt. What do you think? Market forces or Government intervention?
References:
A mammoth task for Sapura Energy, Intan Farhana Zainul, The Star, 2 April 2022
Cover Story: What went wrong at Sapura Energy, Jose Barrock, Adam Aziz and Kathy Fong, The Edge Malaysia, 11 November 2021
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