In a circular to shareholders, the company proposes to issue 9.9 billion new ordinary shares at an issue price of 30 sen together with 998 million free detachable warrants on the basis of five rights shares for every three Sapura Energy shares held.
Another proposal entails a renounceable rights issue up to 2.396 billion new Islamic redeemable convertible preference shares (RCPS-i) in Sapura Energy at an issue price of 41 sen on the basis of two RCPS-1 for every five Sapura Energy shares held.
The exercise will see RM3 billion raised through the rights issue of ordinary shares with free warrants and RM1 billion through the rights issue of Islamic redeemable convertible preference shares (RCPS-i).
Sapura Energy said in a statement that the proposed rights issue is aimed at strengthening its balance sheet to enable the group to pursue further growth opportunities in key markets, including bidding for and undertaking higher value projects globally and support ongoing operations.
The proceeds raised will be used to repay existing borrowings to reduce it by about 24 per cent and lower net gearing to 0.94 times.
In addition, Sapura Energy said it would benefit from savings in finance cost of about RM174 million annually, arising from the lower borrowings, while a stronger balance sheet would provide greater financial flexibility.
Mercury Securities Sdn Bhd, in its independent evaluation report, said the overall effects of the proposed rights issue are expected to be positive for Sapura Energy as the issue price and conversion price of all the rights issue instruments are at a discount of between 69 and 81 per cent to the audited net asset per share as at Jan 31, 2018.
Sapura Energy said Permodalan Nasional Bhd (PNB) and funds under its management had committed to subscribe in full to the rights shares with free warrants entitlement, as well as excess rights shares.
It may result in the PNB Group having a shareholding of 40 per cent of the enlarged share capital after the rights issue, and to all their RCPS-i entitlement and excess RCPS-i.
It could see the PNB Group emerging as the largest single shareholder of Sapura Energy. Shareholders will also be asked to vote for an exemption for PNB Group and parties acting in concert from having to undertake a mandatory takeover of Sapura Energy at the EGM.
The rights issue includes a proposed establishment of an Executive Share Option Scheme (ESOS) of up to 10 per cent of the total number of issued shares to ensure continuity in leadership of the senior management to deliver on the group's long-term goals and drive business sustainability. - Bernama