Protect Sapura from bankruptcy, Najib urges govt

 

Najib Razak said PNB and the previous Perikatan Nasional administration had failed to take Sapura’s problems seriously. (Sapura Energy pic)

PETALING JAYA: Najib Razak has urged the government to protect Sapura Energy Bhd from bankruptcy by providing loans or instructing Petronas or Khazanah Nasional to take over ownership from Permodalan Nasional Bhd (PNB).

The former prime minister was critical of PNB for failing to take action during the tenure of the previous Perikatan Nasional administration on Sapura’s problems and for stopping cash flow assistance.

“PNB and the government need to think about the country’s strategic interests. The ecosystem of Bumiputera vendors, creating high-value jobs for the people and the economy as a whole – it is more than just making another investment.

“If Sapura goes bankrupt, 10.6 million Amanah Saham Bumiputera investors will suffer direct losses of RM4 billion.

“PNB, the Employees Provident Fund and other provident funds will face indirect losses due to debts of RM10 billion owed to local banks, such as Maybank, of which PNB owns 50%,” he wrote on Facebook today.

Najib also said nearly 10,000 high-paying jobs would be lost and around 4,500 vendors or suppliers would be affected.

“Malaysia will lose a multinational company, as well as the largest petroleum services company in the country’s most important sector.”

He urged the government to act immediately by providing easy interest loans or loan guarantees to Sapura to solve its cash flow problems, citing that this was how his Barisan Nasional government saved Proton.

Najib, however, noted that this would be a temporary solution if Sapura remained under PNB, which was “inexperienced” in this sector and had made inaccurate decisions in the past. “The same problem could happen again,” he said.

Alternatively, he said, the government could direct Petronas or Khazanah Nasional Bhd to take over ownership of Sapura. Petronas not only still required Sapura’s services for its projects, but had a better understanding of the sector.

“This was how Petronas saved MISC Berhad in 1998. Upon recovery, Petronas (or Khazanah) can resell part of Sapura’s shares to the local market just as Petronas resold MISC’s shares to make a profit,” he said.

According to Najib, Sapura, 40% of which is owned by PNB, announced a loss of RM8.9 billion last year – the biggest loss for any government-linked company in history. “Sapura is on the verge of bankruptcy, faced with dozens of bankruptcy suits filed by its vendors.”

“Sapura’s share price fell from around 80 sen before GE14 to 3.5 sen. This means that PNB’s additional investment of RM2.7 billion in 2019 when the share price was 41 sen has fallen by almost 95% in just three years.

“Sapura used to be the second-largest oil and gas sector services company in the world with a value of RM30 billion. Currently, this company, which is still a service company to the country’s largest petroleum sector, is only worth around RM500 million to RM650 million,” he said.

Najib said the company’s problems arose out of excessive borrowings made before 2015 when the price of oil hit US$100 per barrel. When Sapura tried to apply for a working capital loan of RM2 billion from local banks after oil prices began rising in 2019, its loan applications were declined.

Although PNB conducted a reshuffling of Sapura’s management in early 2021, Najib said PNB no longer wanted to help the company with a new loan but instructed Sapura to dispose of its assets to solve its cash flow problem.

“Lockdowns, as well as the closure of international borders, complicated the sale of the assets.

“Without bank facilities and working capital to continue existing or undertake new projects, Sapura will certainly go bankrupt,” he said. - FMT