Financially beleaguered Malaysian operator and contractor Sapura Energy has won a short reprieve that will keep its creditors at bay for a further three months.
On Thursday, a local court granted Sapura and 22 of its wholly owned subsidiaries new convening and restraining orders that effectively halt new, or suspend ongoing, legal actions or proceedings by their creditors until 10 June — giving them extra time to try to restructure their debts.
The order will have the effect of restraining legal proceedings against the scheme companies, enabling them to engage with creditors in their debt-restructuring efforts without being distracted by threat of legal proceedings, Sapura noted.
Commenting on the new court orders, Sapura chief executive Anuar Taib said: “We acknowledge the lengthy negotiations process and would like to thank our financiers and trade creditors for their co-operation during the past year. This has been an uphill journey and we have now come to a crossroad [sic].
“We need to offer a fair landing to our financiers, and at the same time ensure that our trade creditors, who include small and medium Malaysian enterprises, are not short-changed.”
Prospects said to be improving
Sapura said that over the past 12 months it has made significant progress with its reset plan as it focused on completing the debt restructuring exercise and turning around its operations.
Despite limited working capital and macroeconomic challenges, the group said its financial performance improved compared with the previous fiscal year, with all segments posting positive earnings before Ebitda in the first three quarters of the 2023 financial year.
As of the third quarter, the group’s order book stood at 6.8 billion ringgit ($1.52 billion), with contract wins for the year amounting to 3.4 billion ringgit. Meanwhile, the order book of its jointly controlled entities stood at another 5.7 billion ringgit.
“The group retained its capabilities despite financial drawbacks, improving the prospects of the company. The beneficiaries of this turnaround include our vendors and the entire value chain in which we operate,” Anuar added.
Sapura claimed the proof of debt exercise with its trade creditors is on track, with the adjudication process currently ongoing. The scheme companies have received about 1.5 billion ringgit in claims submitted by about 2300 vendors.
Last September, Malaysia’s Corporate Debt Restructuring Committee (CDRC) approved Sapura’s application for the committee’s assistance to mediate in its debt restructuring negotiations with financiers for its multi-currency financing (MCF) facilities.
Sapura presented a draft proposed restructuring scheme (PRS) to the financiers on 20 October and has since been making progress through CDRC-mediated meetings with the financial institutions, to seek feedback on and to refine the terms of the PRS.
“The new convening and restraining orders will allow us to complete discussions with our financiers,” Anuar said.
“Through CDRC’s mediation, we aim to reach an understanding and in principle approval with financiers on the complex debt restructuring exercise involving 10.3 billion ringgit in MCF facilities.”
The committee has extended the standstill period for Sapura and its relevant subsidiaries to 9 September 2023. In line with the CDRC’s Participants’ Code of Conduct, the MCF financiers will be expected to observe the standstill and withhold all legal proceedings or recovery actions under the committee’s regime.
The CDRC is a pre-emptive measure by the Malaysian Government to provide a platform for corporate borrowers and their creditors to work out feasible debt resolutions without having to resort to legal proceedings. This initiative has been put in place to ensure that all avenues are made available to assist distressed corporations to resolve their debt obligations, the committee explained.
The previous convening and restraining orders the court granted to Sapura on 10 March 2022, which were extended on 8 June last year, are set to expire on 10 March 2023.
The court’s latest decision also included the effective appointment of existing Sapura Energy independent non-executive director Lim Fu Yen as the majority creditors’ nominated director on the boards of Sapura Energy and the 22 subsidiaries, replacing Cosimo Borrelli, whose term of appointment under the previous court orders expires on 10 March 2023.
https://www.upstreamonline.com/finance/sapu...oor/2-1-1416137 
Feb 18 2023, 09:34 PM
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