STRATEGIC MOVE
SAPURA Energy Bhd is planning to raise RM4 billion from a rights issue as it looks to strengthen its balance sheet and continue with growth momentum. However, its shares plunged 30.25 per cent to close at 41.5 sen yesterday — its second lowest ever — on t
SAPURA Energy Bhd’s share price plunged to its second-lowest close yesterday after the group announced it was undertaking a rights issue to raise RM4 billion.
The stock shed 18 sen, or 30.25 per cent, to close at 41.5 sen yesterday. Its lowest was 41 sen recorded on March 14 this year.
The oil and gas (O&G) company, via a Bursa Malaysia filing yesterday, said the rights issue exercise would be undertaken as part of the company’s broader strategic plan to strengthen its core businesses, boost financial position and create better value for shareholders.
The exercise entails raising up to RM4 billion, of which up to RM3 billion will be through the rights issue of ordinary shares with free warrants, and up to RM1 billion through the rights issue of Islamic redeemable convertible preference shares.
The group is also evaluating other options besides the rights issuance, which may involve the listing of its exploration and production (E&P) business and exploring a possible strategic partnership for its drilling business.
President and group chief executive officer Tan Sri Shahril Shamsuddin said the group was in a strong growth phase and it was determined to capitalise on its opportunities.
“The rights issue will enable us to strengthen our balance sheet and continue with growth momentum, which includes bidding for and executing higher-value projects globally,” he said.
The group has secured contract wins of RM4.5 billion to date.
Its order book has increased to RM16.7 billion, with contract wins in Mexico, Brazil, India, Australia and Malaysia, since the start of the financial year.
Sapura Energy is seeking participation from all substantial shareholders for the exercise, and has secured letters of support from Sapura Technology Sdn Bhd and Permodalan Nasional Bhd (PNB).
Sapura Technology, a direct shareholder with a 16 per cent interest, has expressed its intent to participate in the rights issue for a minimum of RM300 million.
PNB has committed to take up excess shares to be determined later.
The rights issue is subject to shareholders’ approval at an extraordinary general meeting to convene later.
TA Securities Holdings Bhd said the listing of the group’s E&P assets was a potential catalyst, which would unlock value for Sapura Energy’s prized O&G fields.
“If valuations are attractive, significant cash proceeds may be raised to boost Sapura Energy’s balance sheet, and meet working cap and capital expenditure requirements.
“We believe the benefits would more than offset the impact of diluted E&P profits and there was upside to valuations as the book value of Sapura Energy’s O&G assets incorporate oil price assumption of less than US$45 (RM184.50) a barrel estimate,” it said.
TA Securities has maintained its “buy” call on Sapura Energy with a lower target price of 85 sen, from 86 sen previously.