KUALA LUMPUR (Aug 24): Sapura Energy Bhd has proposed a rights issue of new ordinary shares besides Islamic redeemable, convertible preference shares (RCPS-i) in the company to raise up to RM3.98 billion to reduce borrowings.

In a filing with Bursa Malaysia today, oil and gas support services provider Sapura Energy said the rights issue of up to 9.99 billion new ordinary shares at 30 sen each involves 998.69 million free warrants. Sapura Energy said the exercise will be undertaken on the basis of five rights shares for every three shares held and one warrant for every 10 rights shares.

Sapura Energy said the rights issue of up to 2.4 billion RCPS-i at 41 sen each is on the basis of two RCPS-i for every five shares held.

"The primary objective of the proposals which include the proposed rights issue of shares with warrants and proposed rights issue of RCPS-i is to reduce the borrowings of the SEB (Sapura Energy Bhd) Group, so as to strengthen its balance sheet. The stronger balance sheet would enable the SEB Group to bid and undertake higher value projects globally.

"As at April 30, 2018, the total borrowings of the SEB Group is approximately RM16.4 billion. The part repayment of the bank borrowings of the SEB Group is expected to result in interest savings of approximately RM190 million per annum based on an interest rate of approximately 4.8% per annum," Sapura Energy said.

Sapura Energy said barring unforeseen circumstances, the proposals are expected to be completed by the fourth quarter of 2018. Today, the group said Maybank Investment Bank Bhd has been appointed as principal adviser to the company for the proposals.

At 2:41pm today, Sapura Energy shares fell 18 sen to 41.5 sen with some 193 million shares traded. Sapura Energy was Bursa Malaysia's most-active stock.