By MARK RAO
Barakah Offshore Petroleum Bhd became an affected listed issuer after receiving a notice of demand from Export-Import Bank of Malaysia Bhd for millions in defaulted payments.
This comes after its non-current asset, namely Kota Laksamana 101 Ltd, defaulted on instalment payments to the bank amounting to US$2.65 million (RM11.08 million) as of May 16 this year.
The loss-making company further carried out a revaluation exercise for the asset, resulting in the incorporation of a US$39 million (RM161.1 million) revaluation deficit on its books.
Consequently, shareholders’ equity on a consolidated basis was 25% or less of Barakah’s issued share capital, while external auditors expressed material uncertainty over the company’s ability to maintain the required threshold.
The offshore oil and gas (O&G) service provider is now a Practice Note 17 (PN17) status company and will have to submit a regularisation plan to either the Securities Commission Malaysia or Bursa Malaysia Securities Bhd.
This, among others, will require the company to regularise its financial condition, specifically its high debt level which amounted to RM335.6 million in liabilities as of Dec 31 last year.
“The group is in the middle of finalising a debt restructuring scheme to manage the group’s debt,” the company told Bursa Malaysia last Friday.
“The successful completion of the debt restructuring exercise will put the group on a firmer financial footing while relieving its cash flow in the short to medium term.”
Barakah previously announced it has secured a white knight and creditors’ support to inject fresh capital into the company as part of a planned debt restructuring exercise.
Expected to be completed by the end of this year, the scheme could provide the loss-making company a route out of its PN17 status.
Alternatively, if the company fails to regularise its financial condition, its shares will be suspended and subsequently de-listed from Bursa Malaysia.
Industry peers that have undertaken various exercises to restructure and manage their debt include Alam Maritim Resources Bhd, Bumi Armada Bhd and Sapura Energy Bhd.