PETALING JAYA: Bumi Armada Bhd
has proposed a RM1.95bil capital reduction exercise to eliminate its accumulated losses and to allow for future share buybacks.
The offshore energy facilities and services provider, which is almost 35% owned by the estate of the late billionaire Ananda Krishnan, is also seeking shareholders’ approval to purchase up to 10% of its own shares.
The purchased shares may be resold, cancelled, distributed as share dividends or transferred under an employees’ share scheme, the stock exchange was told yesterday.
Bumi Armada said its accumulated losses at company-level amounted to RM1.45bil in the financial year ended Dec 31, 2024 (FY24).
The accumulated losses were mainly attributable to impairment losses recognised on its investments in subsidiaries, amounting to RM1.92bil and RM880.8mil in FY19 and FY20, respectively.
“The impairment of the company’s investments in subsidiaries was, in turn, driven by significant impairments recognised at the subsidiaries and asset level in earlier financial periods.
“In particular, one-off historical impairments amounting to approximately RM2.24bil were recognised at the Bumi Armada and its subsidiaries level in FY18, primarily arising from the underperformance and low uptime availability of the Armada Kraken floating production, storage and offloading vessel, as well as a decline in vessel utilisation and day rates within the offshore support vessels segment,” it said in a bourse filing.
Accordingly, Bumi Armada proposes to first undertake the capital reduction to eliminate the accumulated losses, thereby creating retained earnings to facilitate the proposed share buyback.
Post-capital reduction, the company’s accumulated losses position is estimated to turn positive at almost RM500mil in retained earnings.
Bumi Armada said the share purchases may be funded through internally generated funds and/or external borrowings.
The source of funding will be determined at a later stage depending on, among others, the availability of retained earnings and financial resources of the company at the time of the purchase, the actual number of shares to be purchased and other relevant factors.
“In the event the proposed share buyback is financed through external borrowings, the Board will ensure that the company will have sufficient funds to repay such borrowings and that such repayment will not have a material adverse impact on the cash flow of the company or the group.”
The company also pointed out that it may only purchase its own shares at a price, which is not more than 15% above the volume-weighted average market price of the shares for the five market days immediately before the purchases.
Barring any unforeseen circumstances and subject to the approvals, Bumi Armada’s board of directors expects the proposed capital reduction to be completed by the third quarter of FY26.
The Bumi Armada stock closed 3.1% higher yesterday at 33 sen per share.
In the past one year, the stock was down 40%.
