Will Sapura prosper with a new skipper at the helm?

INVESTORS of Sapura Energy Bhd can be forgiven for expecting the global integrated oil and gas (O&G) services and solutions provider to shine the way Berjaya Corp Bhd (BCorp) did when the latter announced its ‘change of guard’ recently.

BCorp shares rose the very next day after the appointment of former Permodalan Nasional Bhd CEO Abdul Jalil Abdul Rasheed as the diversified conglomerate’s new group CEO on March 16.

From 18 sen, BCorp has rose 67% to touch a high of 30 sen on March 23 amid a hefty volume of 417.69 million shares which is seen as an acknowledgement of Jalil’s coming on board BCorp.

However, the same sentiment did not prevail at Sapura Energy when it announced the stepping down of its president and group CEO Tan Sri Shahril Shamsuddin at a ripe age of 60 to make way for his successor Datuk Mohd Anuar Taib with effect from March 23.

Sapura Energy’s share price has remained muted at the 15 sen to 16 sen level even as AmResearch rated the company a “buy” with a fair value of 29 sen.

“We are positive of 53-year-old Anuar taking over as the CEO,” commented analyst Alex Goh in a company update. “He comes with a commendable track record of helming Petronas Carigali as its CEO before heading Petronas’ upstream division as the executive vice president.”

Datuk Mohd Anuar Taib

Anuar who joined Sapura Energy as an independent director in August last year was appointed chief operating officer and CEO-designate in October 2020, apparently as a move for him to understudy his predecessor as well as to get himself familiarised with the group’s business culture.

Apparently, where Sapura’s share price is today will mean that its co-founder Tan Sri Mokhzani Mahathir would harbour no regrets exiting the company after having disposed his entire 10.1% stake or 605 million shares in Sapura Energy via a private placement in early November 2017 at a price range of RM1.42 to RM1.49.

Mokhzani incidentally is slated to take over as Maxis Bhd chairman on April 22.

Share price aside, AmBank Research’s Goh hinted that the transition at Sapura Energy is deemed positive against the backdrop of an ongoing corruption probe by Brazilian and Dutch authorities into the award of three pipe-laying support vessel charters to Sapura-Seadrill joint venture back in 2011.

“Together with the oversight of Permodalan Nasional Bhd which has a 40% stake in the group, this reaffirms our three-star ESG (environmental, social and governance) evaluation for Sapura Energy,” justified the analyst.

Beyond the corruption probe, Sapura Energy has its fair share of legacy issues. In July 2018, former head honcho Shahril was embroiled in a controversy when he took home RM55 mil in bonus payments and RM16.56 mil in salary and other emoluments in FY2018.

Excluding an intellectual property rights payment of RM43.4 mil, Shahril’s compensation amounted to RM71.92 mil in FY2018 at a time when Sapura Energy incurred a net loss of RM2.5 bil on revenue of RM5.89 bil. The loss was mainly attributed to a RM2.1 bil impairment provision for the company’s drilling segment.

This led to calls by minorities for Shahril to step down. However, it was revealed that any move to oust him from the board would have dire consequences.

Sapura Energy’s 14 bankers have a covenant on a RM16 bil refinancing package put together in 2014 that required Shahril to maintain his shareholding above 10% and remain as CEO, failing which the loan will default.

At the close of the morning session, Sapura Energy was down 0.05 sen or 3.33% to 14.5% with 16.62 million shares traded, thus valuing the company at RM2.32 bil. – March 25, 2021

Subscribe and get top news delivered to your Inbox everyday for FREE