The integrated oil and gas (O&G) services provider said the final plan to exit its Practice Note 17 (PN17) status will be “submitted soon” to the capital market regulators.

“We are confident the successful execution of the plan will return the group to profitability and restore confidence among stakeholders,” said group CEO Muhammad Zamri Jusoh in the company’s filing with Bursa Malaysia today.

A key component of the plan is a “capital reconstruction” involving a 99.99% capital reduction to offset accumulated losses, and a 20-to-1 share consolidation to enhance share trading price and reduce price volatility.

The capital reduction will see its share capital slashed from around RM12 billion to just over RM1 million. The share consolidation exercise will reduce its share base to between 919 million and 1.01 billion.

A debt restructuring exercise will reduce its total borrowings from about RM10.8 billion to RM5.6 billion, yielding substantial interest savings through several mechanisms such as debt conversions to equity and equity-like instruments and a debt waiver.

The exercise could potentially reduce its finance costs by RM517 million or nearly 60% to RM322.3 million from RM863.5 million in the 12 months ended Jan 31, 2025.

Concurrently, the group has worked with the financiers of its multi-currency financing facility, through mediation by the Corporate Debt Restructuring Committee, to develop an “acceptable solution” through a proposed debt restructuring scheme.

The scheme of arrangement, approved by relevant scheme creditors in February 2025 and sanctioned by the Court in March 2025, provides for a structured debt resolution framework.

The regularisation plan also involves a fund-raising initiative where ministry of finance-owned Malaysia Development Holding Sdn Bhd (MDH) will subscribe up to RM1.1 billion in redeemable convertible loan stocks (RCLS).

The MoF has stated the funds raised will be earmarked to settle outstanding payments to vendors in the Malaysian O&G ecosystem. The group supports over 2,000 Malaysian vendors of which roughly 1,800 are small and medium enterprises.

MDH, which becomes a major shareholder with a 33% stake upon full conversion of the RCLS, will seek an exemption from making a mandatory general offer to the group’s existing shareholders.

Return to profitability

Sapura Energy’s regularisation plan marks the culmination of a turnaround strategy initiated after it fell under the PN17 classification for financially distressed companies in 2022.

“Implementation of the proposed regularisation plan, together with the group’s continued focus on its core businesses represents the most viable pathway to turn around its financial condition,” said Zamri.

On the business front, things are starting to look up for the group. It returned to the black for the first time in six years after posting a profit after tax of RM190 million for the year ended Jan 31 (FY2025) from a loss after tax of RM509 million in FY2024.

Its revenue also rose 8.9% year-on-year to RM4.7 billion while its cash and cash equivalents have progressively improved from RM442.2 million in FY2022 to RM2.1 billion in FY2025.

Meanwhile, the group’s external auditors – Ernst & Young PLT (EY) which audited its FY2025 financial statements – has issued an unqualified audit opinion on its ability to continue as a going concern.

In a bourse filing today, Sapura Energy said EY highlighted that the group and company’s current liabilities had exceeded their current assets by RM11.25 billion and RM4.31 billion respectively as of end-January, indicating it is facing severe liquidity constraints.

This marks the fourth consecutive year in which its auditors have raised a material uncertainty regarding the group’s going concern status.

Nevertheless, EY said that the FY2025 financial statements had been prepared on a going-concern basis, which remain valid only if the group successfully obtains the necessary approvals and completes its proposed regularisation plan by the long-stop date of March 11, 2026.

Sapura Energy operates in about 20 countries with a workforce of roughly 13,000 people worldwide, the majority of whom are Malaysians.

Its shares closed unchanged at 4.5 sen today, giving it a market capitalisation of RM827 million.