By Jose Barrock
Sabah Development Bank Bhd (SDB) is looking to take over a controlling stake in oil and gas player M3nergy Bhd (formerly known as Trenergy Bhd), in a debt for equity swap.
The move to take over M3nergy, sources say, will give the state ownership of oil and gas assets and enable Sabah to get involved in lucrative oil and gas contracts, being dished out by oil major Petroliam Nasional Bhd (Petronas).
Sharazi Sha’ari
Sharazi Sha’ari, the controlling shareholder of M3nergy had taken a loan from SDB for a management buyout of M3nergy in 2010, and SDB is now swapping the debt to wrest control of the company.
KiniBiz could not contact Sharazi as he was abroad while SDB chief executive officer, Peter Lim Siong Eng did not respond to calls made to his office.
It is not clear how much Sharazi owes SDB.
“It’s a good move by SDB. They have worked with M3nergy for three years now, and know the management. While the ownership will be held by SDB, the management of M3nergy will still be retained,” the source said.
M3nergy has under its belt one floating production storage and offloading (FPSO) vessel, and two floating storage and offloading (FSO) vessels.
This could tie in very well for SDB as it could secure jobs at deep water oil and gas fields such as Kikeh, Gemusut-Kakap and Malikai, all off the shores of Sabah, which utilise FPSO’s and FSO’s, as the building of traditional platforms is not viable.
The source added that M3nergy could be sold to SDB as early as this week, with a signing ceremony slated to take place soon.
At present most Sabah based oil and gas companies are small, and are thus often left out of the contract awards.
Even the building of the RM2.4 billion Sabah Oil and Gas Terminal (SOGT), awarded in August 2010, is being done by Sarawak based Naim Holdings Bhd and South Korea’s Samsung, with no Sabah companies sharing the spoils.
To recap, M3nergy, which was known as Trenergy for the longest time, has its roots in Terengganu, and is the short form for Terengganu Energy. The company’s shares were floated on Bursa Malaysia in the mid 90’s, and it was previously controlled by the Melewar group, linked to the Negeri Sembilan royal family.
Sharazi the managing director of M3nergy had via his vehicle Adamus Avenue Sdn Bhd, taken a loan from SDB in 2010 to privatise the listed entity M3nergy. He bought up all the shares not owned by him at RM1.85 a share, and forked out RM234.3 million in a management buyout.
A check with the Companies Commission of Malaysia (CCM) reveals that Adamus Avenue which has a paid up capital of RM2, had several charges with Sabah Development Bank, some for as high as RM312.14 million which were still unsatisfied.
A check with the CCM also reveals that Adamus Avenue has pledged its entire 131.12 million shares in M3nergy to Sabah Development Bank.
M3nergy is among the few Malaysian oil and gas players owning FPSO and FSO assets.
“The company (M3nergy) had an FPSO back in the late 90’s…it was the first Malaysian company to have one, it’s a known name in oil and gas circles… so SDB is going to take over a relatively well-known company with existing assets,” the source said, explaining the appeal of M3nergy.
M3nergy’s FPSO Perintis was converted in 1999, and has a storage capacity of 650,000 barrels of oil and production capacity of 35,000 barrels of oil a day. The vessel is currently located at the MASA oil field 155 kilometres off the shore of Terengganu, chartered by Petronas Carigali Sdn Bhd.
The company FSO, (floating storage and offloading) vessel, FSO Ratu Songkhla is deployed at the B-17 field, offshore Malaysia-Thailand Joint Development Area, chartered by Carigali-PTTEPI Operating Company Sdn Bhd.
M3nergy is also providing operations and maintenance services for FSO Puteri Cakerawala.
The company also has a Production Sharing Contract (PSC) in Ujung Kulon on the oil and gas block on and offshore West Java, Indonesia. The PSC between BP Migas and M3nergy is for a 30-year tenure, and was signed in May 2007.
However M3nergy has not been performing well.
According to the CCM, for its financial year ended June last year M3nergy posted an after tax profit of RM1.16 million from RM265.43 million in sales. As at end June last year, M3nergy had non-current assets worth RM681.86 million and current assets of RM136.06 million. On the other side of the balance sheet, M3nergy had long term debt commitments of RM259.97 million and short term borrowings of RM170.25 million.
SDB according to its website posted a net profit of RM93.77 million for the year ended December 2011. The company’s shareholders funds stood at RM582.59 million.
Interestingly enough, SDB has a several business under its control including a property development and has the concession to supply treated water to Kota Kinabalu.
RAM Ratings reaffirmed the AAA rating of the Sabah State Government’s RM544 million Bonds (2009/2014) with a long-term stable outlook rating.
RAM said, “The rating reflects the State’s healthy fiscal position, strong fiscal-adjustment capacity and supportive relationship with the Federal Government, complemented by the availability of natural resources for future economic growth.”
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