Sabah Development Bank is actively trying to recover debts: Masidi
Published on: Saturday, April 27, 2024
By: Larry Ralon
Masidi said any issuance from Sukuk cannot be used to pay dividends to the State Government because it conflicts with the terms and conditions of the Sukuk Wakalah Programme. - Bernama pic
Kota Kinabalu: State Finance Minister Datuk Seri Masidi Manjun said Sabah Development Bank (SDBank) is aggressively working to restructure and recover its bad debts.
“The takeover of Sabah International Petroleum Sdn Bhd (SIP) by SMJ Energy Sdn Bhd (SMJE), among others, helped reduce SDBank’s debt burden in addition to injecting revolving capital (recapitalisation) into SDBank.
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“Prior to this acquisition, SIP had ventured into several businesses that suffered losses in the field of oil and gas and had very high loans and incurred high interest rates that affected their profitability and financial sustainability.
“Accordingly, the issuance of RM900 million Sukuk for the purpose of acquiring SIP is a value accretive acquisition given the ability to generate large dividends from SIP’s 10pc shareholding in LNG9 Sdn Bhd.
“SMJE also restructured SIP by focusing on more profitable business in addition to the refinancing of SIP loans which allowed SMJE to use much lower interest rates than the capital market to pay SIP debt, which has a very high interest rate.
“Since SMJE took over SIP in October 2023, it was able to declare a dividend to SMJE which enabled SMJE to achieve its targeted profit.
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“In addition, SMJE also obtained results from other transactions that have returned a profit after tax of RM217 million which enables it to return a dividend of RM50 million to the State Government in 2023.”
Masidi said any issuance from Sukuk cannot be used to pay dividends to the State Government because it conflicts with the terms and conditions of the Sukuk Wakalah Programme.
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“Sabah continues to benefit from its involvement in the oil and gas sector through the Commercial Cooperation Agreement (CCA) signed with Petronas on Dec 7, 2021.
In line with the CCA, SMJE acts as a Prudent Financial Investor by focusing on the production of oil and gas assets across the Upstream, LNG and Downstream/Petrochemical Sectors with healthy cash flows and operated by leading operators with proven Environmental, Social and Governance (ESG) track records.
“On April 5, 2023, SMJE finalised the acquisition of 50pc participation in PSC Samarang by signing the Farm Out Agreement. Completion of the acquisition since May 31, 2023 has enabled Sabah to sell its crude oil rights at the Labuan Crude Oil Terminal (LCOT) to international crude oil buyers for a total of four cargoes thus far with an estimated cumulative sales revenue of just under RM580 million so far.
“On June 6, 2023, SMJE became a registered 25pc shareholder of Sabah Ammonia Urea Petrochemical Plant (Samur) in Sipitang.
“Since the acquisition, SMJE has received a net income from Samur of RM 53 million for the financial year 2023.
“On Oct 25, 2023, SMJE acquired a 10 per cent participation interest in Petronas LNG9 (PLNG9) through the acquisition of Sabah International Petroleum (SIP). Sabah received a cash payment of RM343 million from PLNG9 in 2023 alone.
“In addition, SMJE has received another RM112 million in dividends from PLNG9 since the beginning of this year and expects healthy dividends in the years to come.
SMJE continues to pursue several profitable Upstream, LNG and Downstream/Petchem opportunities with the solid support of the State Government,” he said.
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