Sapura Energy’s massive RM4bil cash call triggers steepest share price plunge on record (updated)

Positive growth: Shahril says the firm is confident its strong track record and proven technical capabilities will position it for further growth

KUALA LUMPUR: Shares in Sapura Energy Bhd slumped to a near all-time low, as investors fled on news that the oil and gas contractor is planning to launch a massive RM4bil cash call.

The stock was last traded at 41.5 sen on Friday, down 18 sen, or 30% lower from its previous close. More than 630 million shares changed hands, making it one of the busiest trading days for the counter.

At this price, the company’s market capitalisation stands at RM2.48bil.

President and group CEO Tan Sri Shahril Shamsuddin. whose RM72mil annual paycheck in the financial year ended Jan 31, 2018 (FY18) had drawn investors’ scrutiny, said in a statement on Friday that the RM4bil rights issue exercise was necessary to strengthen the company’s balance sheet and fuel its future growth.

He also said the fund-raising plan had the backing of key shareholders - Sapura Technology Sdn Bhd and Permodalan Nasional Bhd (PNB).
Shahril controls Sapura Technology, which owns a 16% stake in Sapura Energy. The company, he said, has expressed its intention to take up at least RM300mil worth of rights shares.

“In addition to the rights issue exercise, the group is evaluating various options which may involve the listing of its exploration and production (E&P) business and exploring a possible strategic partnership for its drilling business,” Shahril said.

The rights issue exercise entails raising up to RM4bil, of which up to RM3bil will be through the rights issue of ordinary shares with free warrants, and up to RM1bil through the rights issue of Islamic redeemable convertible preference shares (RCPS).

The rights issue will be priced at 30 sen each on the basis of five rights shares for every three shares held and one free warrant for every 10 rights shares.

The theoretical ex-rights price (TERP) of the shares of 41 sen was based on the five-day volume weighted average market price of the shares up to and including Aug 23, being the last trading day prior to this announcement, of 59 sen.

The rights issue price is a discount of about 26.8% to the TERP.

The board has fixed the exercise price of the warrants at 49 sen per warrant, which represents a premium of about 19.5% to the TERP of the shares of 59 sen.

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

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