KUALA LUMPUR — National investment arm Permodalan Nasional Berhad (PNB) has hit back at claims that the investment in Sapura Energy Berhad (SEB) by Malaysia Development Holdings Sdn Bhd (MDH) is a government bailout, insisting that it is a crucial intervention to safeguard Malaysia’s oil and gas ecosystem.
Dismissing speculation, PNB emphasised that the move is about preserving the industry’s financial stability, ensuring the survival of local vendors, and maintaining national energy security.
“The funds are directly and only used to repay local vendors, without benefiting any existing SEB shareholders or financial creditors,” PNB said.
Why is this investment necessary?
PNB insists that the MDH investment is vital to ensuring the financial sustainability of Malaysia’s oil and gas sector. SEB works with over 2,000 vendors, many of which are small and medium enterprises (SMEs), and its operations support approximately 59,000 workers in the industry.
Beyond safeguarding local vendors, the investment prevents an economic ripple effect that could harm the broader industry.
Without SEB, Malaysia would need to outsource oil and gas services to foreign providers, leading to capital outflows.
According to PNB, this investment ensures that “the country’s oil and gas work will continue to be done by Malaysians, benefiting Malaysian GNI by RM1.1 billion and positively impacting the currency exchange rate.”
How does this impact the broader economy?
PNB noted that SEB plays a critical role in Malaysia’s oil and gas supply chain, and its stability is essential to national energy security.
“Preserving SEB and the broader oil and gas ecosystem is essential for the continuity of projects that contribute to national revenue and energy security,” PNB said.
Additionally, the investment facilitates the completion of one of Malaysia’s largest corporate and debt restructuring exercises, involving major banks.
“The investment will help prevent the liquidation of SEB, which would result in the fire sale of strategic national oil and gas assets, domestically and globally,” PNB explained.
Is this really a bailout?
PNB strongly denies that the MDH investment is a financial handout. It pointed out that the restructuring follows global best practices, citing similar efforts by Singapore’s Temasek in Sembcorp and South Korea’s support for Daewoo Shipbuilding.
Furthermore, the investment is structured as redeemable convertible loan stocks (RCLS), meaning MDH will receive fixed profit payments, and there is an option to convert into shares if SEB’s share price improves.
“The investment by MDH will take place after SEB’s financial institution creditors agree to a substantial direct haircut as well as indirect haircut due to the loss of value from the conversion of debt to shares at a steep premium,” PNB added.
It noted that existing shareholders will also face significant dilution as part of the debt restructuring scheme.
PNB expressed confidence in SEB’s new management, saying the company remains committed to its restructuring plans and long-term resilience.
It also noted that the investment by MDH is repayable, adding that with the investment in SEB, RCLS generates fixed profit payment to MDH and is “redeemable with the option to enjoy the upside through conversion into shares should SEB’s share price perform in the future.”
“The investment by MDH which will path the way for the completion of its financial restructuring efforts that will lead to SEB regaining a solid financial footing and recovery.
“The Company is committed to repaying this trust by continuing to implement the company’s business and restructuring plans, focusing on long-term value creation and operational resilience as well as play its continued role as a catalyst for local O&G services industry,” PNB said.
“PNB is confident that SEB’s new management will continue to implement the company’s existing business and restructuring plans, while focusing on long-term value creation and operational resilience.” – March 12, 2025