KUALA LUMPUR (July 8): Barakah Offshore Petroleum Bhd has found a white knight, Singapore’s Lecca Group Ptd Ltd, to revive its financial health. 

The debt-laden Practice Note 17 (PN17) firm has proposed a regularisation plan that includes disposal of a pipelay barge to Lecca Group, as well as a share capital reduction, share placements, plus debt settlements through the issue of redeemable unsecured loan stocks (RULS), after a total waiver of RM153.99 million owed.

Barakah said in the filing with Bursa Malaysia today that it is proposing for its unit PBJV Group Sdn Bhd to sell the pipelay barge, a long flat-bottomed maritime vessel, to Lecca Group for US$21 million cash or approximately RM88 million, based on market valuation.

The pipelay barge was commissioned for construction in 2009 at a cost of RM286.37 million, and was completed in September 2012.

In addition, Barakah intends to place out 375 million shares to Lecca at four sen per share under tranche 1 placement and RM25 million in nominal value of redeemable convertible unsecured loan stocks (RCULS-B) on a five-for-three basis. 

Consequently, Lecca Group will emerge as the single largest shareholder with 44.87% stake. 

Barakah’s current largest shareholder Nik Hamdan Daud stepped down as the group’s president and chief executive officer in March. He owns 15.7% stake now.

The proceeds of RM88 million raised from the proposed disposal will be utilised as partial repayment of debt owing to EXIM Bank upon completion, Barakah said.

Barakah's wholly-owned subsidiary, Kota Laksamana 101 Ltd (KL101), has defaulted on its instalment payments to the Export-Import Bank of Malaysia Bhd (Exim Bank). KL101 is its core unit.

In mid-May, the subsidiary had received a notice of demand for the outstanding US$2.65 million (approximately RM11.08 million) owing under the Ijarah facility agreement.

Fresh RM40 million funds raised from share placement and RCULS-B, will used for debt settlement, besides funding working capital.

Furthermore, Lecca Group is granted an option for it to subscribe an additional of up to 250 million shares under tranche 2 placement at four sen apiece, exercisable within five years.

Barakah said it will seek for an exemption for Lecca to undertake a mandatory general offer to acquire the remaining Barakah shares it does not own.

Meanwhile, Barakah has also proposed to undertake a share capital reduction that entails the cancellation of RM185.51 million of its issued share capital to RM46.38 million.

This will give rise to a credit of RM185.51 million, which Barakah Offshore said will be utilised to set-off accumulated losses of the company.

As for its debt settlement schemes, Barakah said there will be a cash settlement of RM32 million and a total waiver of RM153.99 million owing to its scheme creditors.

The company will also issue up to RM33 million in nominal value of RCULS-A and RM69 million in nominal value of redeemable unsecured loan stocks (RULS), as part of the settlement.

As at May 31, 2019, total outstanding liabilities due to the scheme creditors of Barakah and PBJV amounted to RM106.65 million and RM287.99 million respectively.