Sapura raising $973M for growth. Eyeing partnership for offshore drilling division

Malaysia’s SapuraEnergy, both an oil company and an offshore services provider, is looking to raise 4 billion Malaysian ringgit through a rights issue. It is also thinking of listing E&P business and find a partner for its drilling business.

In a statement on Friday, Sapura Energy said it had proposed a rights issue as part of a broader strategic plan to strengthen the group’s core businesses, boost its financial position, and create better value for its shareholders.

“In addition to the rights issue exercise, the Group is evaluating various options which may involve the listing of its E&P business and exploring a possible strategic partnership for its Drilling business,” the company said. The company owns a fleet of Tender Assist Drilling rigs.

The exercise entails raising up to RM4.0 billion ($973 million), of which up to RM3.0 billion will be through the rights issue of ordinary shares with free warrants and up to RM1.0 billion through the rights issue of Islamic redeemable convertible preference shares.

Shahril Shamsuddin, President and Group Chief Executive Officer, Sapura Energy Berhad, said: “Sapura Energy is in a strong growth phase today and we are determined to capitalize on the emerging opportunities. The rights issue will enable us to strengthen our balance sheet and continue with our growth momentum which includes bidding for and executing higher value projects globally.”

“It is now an opportune time for Sapura Energy to execute our strategic plan that will allow each of the businesses to have access to capital markets to pursue their growth aspirations and ride on the growth wave.”

The company said the rights issue offered an opportunity for all shareholders to participate in the company’s equity potential “as it enters its current phase of growth which has seen significant successes.”

Seeking shareholder support

The Group is seeking participation for the exercise from all substantial shareholders and has since secured letters of support from Sapura Technology Sdn Bhd (“Sapura Technology”) and Permodalan Nasional Berhad (“PNB”).

Sapura Technology, a direct shareholder which holds 16%, has expressed its intent to participate in the rights issue for a minimum amount of RM300 million. Meanwhile, PNB has indicated its support for the exercise by committing to subscribe to its entitlement and is looking at the prospect of taking up excess shares up to an agreed amount to be determined later.

The proposed rights issue is subject to shareholders’ approval at an Extraordinary General Meeting to be convened later.

Sapura Energy said that over the years, each of the Group’s three distinct businesses has grown considerably and established themselves as world-class players in their respective segments.

“Each of these business segments has differing aspirations, capital requirements and unique risk-reward profiles, which prompted the strategic plan,”  the company said.

“Our businesses have grown to such a scale that it is now an opportune time for Sapura Energy to execute our strategic plan that will allow each of the businesses to have access to capital markets to pursue their growth aspirations and ride on the growth wave,” said Shahril Shamsuddin

“We aim to further unlock the value of our businesses for our shareholders through a concerted effort to deleverage the Group, enhance our equity base and ensure our businesses are well capitalised as they chart their own growth path,” Tan Sri Shahril explained.