The Board of Directors of the Company wishes to announce that the Company and twenty-two (22) of its wholly-owned Subsidiaries as named in Appendix 1 (collectively, the “Applicants”), in light of the impending expiry of the earlier Orders granted by the High Court of Malaya at Kuala Lumpur (the “Court”) under Sections 366 and 368 of the Companies Act 2016 (the “Act”) on 10 March 2023, filed a fresh application under Sections 366 and 368 of the Act and were granted the following Orders by the Court on 8 March 2023, such orders to take effect on 11 March 2023:
1. an order pursuant to Section 366(1) of the Act (the “S.366 Order”) for each of the Applicants to summon meetings of the various classes of its creditors (collectively, “Creditors”) to consider, and if thought fit and appropriate, to approve, a proposed scheme of arrangement and compromise between such Applicant and its Creditors (all such schemes being, collectively, the “Proposed Schemes of Arrangement”); and
2. a restraining order pursuant to Section 368(1) of the Act (the “Restraining Order”, and collectively with the S.366 Order, the “Orders”), to restrain and stay all proceedings and/or further proceedings and/or intended and/or future proceedings in any action or proceeding against any Applicant and/or its respective assets (wherever located, and whether held by such Applicant in whole or in part, directly or indirectly, as principal or agent, beneficially or otherwise), including without derogating from the generality of the foregoing:
a. winding-up and arbitration proceedings as well as any intended or future proceedings (including but not limited to for the appointment of any liquidator(s), receiver(s) and/or manager(s), nominee(s) (pursuant to an application for a corporate voluntary arrangement) and/or judicial manager(s) over any Applicant and/or the Assets of such Applicant);
b. execution or enforcement process, extra-judicial proceedings, filing of admiralty in rem writs, warrants of arrest or other proceedings;
c. any proceedings under the Construction Industry Payment and Adjudication Act 2012;
d. any proceedings in any tribunal under any statute;
e. demands for payment, enforcement or exercise or intended exercise, of any liens, securities, right of set-off, undertakings and guarantees under any documentary and standby letters of credit, performance bonds, bid bonds, bank guarantees or security documents or creation of any statutory lien and/or other contingent trade related instruments against any Applicant or any institution that has issued such instrument at the request of any Applicant pursuant to a facility entered into with that Applicant;
f. the dealing with such assets in any way or entering upon any premises upon which such assets may be located except with the prior written consent of the respective Applicant for upon further order of the Court;
g. the enforcement or exercise of any right (including but not limited to any garnishee actions, contra or set off of debts, claims against guarantees provided, enforcement of alleged liens, right of dilution, registration, encumbrance, sale or forced sale, buy-out, divestiture, repudiation, rescission, set-off, repossession, distress, conversion, possession, termination, suspension, modification or cancellation or the right to revoke any qualification or registration), option or remedy arising by law, by virtue of any agreement or by any other means against any Applicant or the Assets of any Applicant as a result of:
i. any default or non-performance by any Applicant and/or its subsidiaries howsoever arising and/or any other circumstances which may give rise to any right to take action against the Applicant;
ii. any guarantees provided by the Applicant and/or alleged liens against the Assets of the Applicant;
iii. the making of the Restraining Order; and
h. without prejudice to the generality of the foregoing, any procedural step that is part of a larger action, or special proceedings before any person or any trustee on behalf thereof may enforce its rights, including any demand for payment and any declaration of an event of default,
for a period of three (3) months from the date the Restraining Order takes effect (such period being from 11 March 2023 to 11 June 2023), except by leave of the Court.
The Restraining Order will not apply to certain financial institutions (collectively, the “MCF Financiers”) who have provided multicurrency financing facilities to Sapura TMC Sdn. Bhd. under:
a. the senior multicurrency term facilities agreement dated 29 March 2021 between, inter alia, Sapura TMC Sdn. Bhd. as borrower, and the banks named therein as conventional facility lenders; and/or
b. the multicurrency sukuk programme of up to RM10,000,000 in nominal value (or the equivalent in USD, converted at a notional exchange rate of USD1.00 = RM4.15) based on the Shariah principle of murabahah (via a tawarruq arrangement), established under a programme agreement originally dated 20 August 2015 between Sapura TMC Sdn. Bhd. as issuer, Maybank Investment Bank Berhad as lead arranger, and Maybank Investment Bank Berhad as facility agent, and as thereafter amended and supplemented.
As announced on 1 March 2023, the Company received a formal notification dated 24 February 2023 from the Corporate Debt Restructuring Committee (“CDRC”), stating that the CDRC Committee had extended the standstill period for the Company and its relevant subsidiaries under the CDRC regime, up to 9 September 2023. In the premises, and in line with the CDRC’s Participants’ Code of Conduct, the MCF Financiers will continue to be expected to observe the informal standstill and withhold all legal proceedings and/or any other recovery action initiated or intended against the Company and/or the Company’s subsidiaries under the CDRC regime. As the MCF Financiers are bound by the CDRC standstill, they have been excluded from the application of the Restraining Order.
The High Court had also approved the nomination of Sapura Energy's existing Independent Non-Executive Director, Mr Lim Fu Yen as the majority creditors' nominated director for Sapura Energy, and appointed Mr Lim Fu Yen as the majority creditors' nominated director for the 22 subsidiaries, replacing Mr Cosimo Borrelli, whose term of appointment under the court order will expire on 10 March 2023.
The Orders granted by the Court will allow the Applicants to finalize the Proposed Schemes of Arrangement for the approval of their Creditors pursuant to Section 366 of the Act to settle the Creditors' claims.
The Restraining Order will further allow each of the Applicants and its Creditors to negotiate and finalise the terms of its Proposed Schemes of Arrangement without the disruption of threatened and ongoing legal proceedings in the interim.
Financial and operational impact of the Restraining Order
It is not envisaged that the Restraining Order will have any material adverse financial and operational impact on the Group as:
a. the Restraining Order was granted to enable the Applicants and their creditors to formalise the Proposed Schemes of Arrangement for the approval of the creditors under section 366 of the Act, and does not prevent the Applicants from continuing with their day-to-day business and operations as usual;
b. the Restraining Order will have the effect of restraining legal proceedings against the Applicants that might otherwise disrupt the operations of the Group and/or constitute a drain on its resources pending finalisation and approval of the Proposed Scheme of Arrangement, and the Restraining Order is therefore expected to be of overall benefit to the Group for the duration of the period that it is in force; and
c. whilst in some cases, the issuance of the Restraining Order might potentially give a contractual counterparty a right to terminate its contract with an Applicant, the Applicants do not thereby anticipate any material adverse impact on the finances or operations of the Group, either because the relevant Applicant anticipates being able to manage the risk by appropriate engagement with the relevant counterparty (or has already done so), or because the termination of the relevant contract is not expected to have any such impact.
Details of the Proposed Schemes of Arrangement
A draft outline of the Proposed Schemes of Arrangement is enclosed in Appendix 2. The terms of the Proposed Schemes of Arrangement as summarised in the draft outline are subject to change, including as a result of any discussions or negotiations between the Applicants and their Creditors.
Additional information
The Company will make additional announcements when there are further developments in relation to the Orders, the proposed restructuring and/or other matters contemplated by this announcement.
This announcement is dated 8 March 2023.