By MARK RAO / Pic By barakahpetroleum.com
BARAKAH Offshore Petroleum Bhd is undertaking a capital reduction, asset disposal and share placement, among others, as part of its proposed regularisation plan to lift itself out of its Practice Note 17 (PN17) status.
“The proposed regularisation plan has been formulated to address and uplift the PN17 status of Barakah with the main objective (being) to return Barakah to a better financial standing and settlement of scheme creditors, thereby benefitting all stakeholders,” the company told Bursa Malaysia yesterday.
Pursuant to this, the offshore oil and gas (O&G) service provider intends to reduce its issued share capital from RM231.89 million to RM46.38 million.
This will result in RM185.51 million of credit that will be used to offset its accumulated losses, which stood at RM326.14 million as of end-May.
The proposed reduction is contingent on shareholders’ approval and an order being secured from the High Court of Malaya approving the exercise, while the reference share price of the company is set to remain intact.
The group will dispose of its pipelay barge, a marine vessel used for underwater pipelaying, to Singaporean ship bunkering company Lecca Group Pte Ltd for US$21 million (RM88 million).
The sale of the asset — which is currently owned by its unit, Kota Laksamana 101 Ltd — will not result in the company becoming a cash company, Barakah noted.
The corporate exercise will include a placement of 375 million shares or 44.87% of the company’s issued share capital at four sen apiece, as well as RM25 million in five-year 10% redeemable convertible unsecured loan stocks (RCULS).
The latter is at 100% of its nominal value of four sen each and is on the basis of five RCULS for every three placement shares under the first tranche.
Up to RM40 million will be raised from these placements, of which RM32 million will be used to pay back creditors.
Lecca Group will subscribe to the new shares and can further subscribe to up to 250 million placement shares, also at four sen apiece, at any time over a five-year period from the date that the subscription is completed.
Barakah is also seeking to exempt Lecca Group from its mandatory takeover obligation as the placements will result in the latter being the majority shareholder of the company.
Following the exercise, Barakah and its unit PBJV Group Sdn Bhd will have to settle the amount owed to their scheme creditors, including a waiver of debt amounting to RM153.99 million owed to creditors and a RM32 million cash payment.
Moreover, Barakah will issue RM33 million in five-year 3% RCULS at four sen apiece and RM69 million in five-year 5% redeemable unsecured loan stocks at RM1 each to the scheme creditors.
Barakah slipped into PN17 status on May 17 this year after failing to make repayments totalling US$2.65 million owed by Kota Laksamana 101 to Export-Import Bank of Malaysia Bhd.
The company’s regularisation needs a sign-off from Bursa Malaysia Securities Bhd, as well as approval from the Securities Commission Malaysia for the RCULS issuance and Lecca Group’s exemption from its mandatory take-over obligation.
Barring unforeseen circumstances and subject to all relevant approvals being secured, Barakah expects to complete its regularisation by the first quarter of 2020 (1Q20).
Barakah’s fall into affected listed issuer status is not isolated, as its O&G peer Perisai Petroleum Teknologi Bhd is in the midle of submitting a regularisation plan.
The latter has until the end of this year to submit a new regularisation plan or face delisting.
Other sector companies that have undertaken various exercises to restructure and manage their debt include Alam Maritim Resources Bhd, Bumi Armada Bhd and Sapura Energy Bhd.