The PN17 company’s largest shareholder, Singapore-based Emas Offshore Ltd, is facing its own problems, casting further doubt on both parties’ ability to resolve an ongoing dispute on a shareholders’ agreement.
Emas Offshore CEO and executive director Captain Adarash Kumar Chranji Lal Amarnath resigned on Jan 18 2018, with his last day on April 6 2018. Adarash, a master mariner, was appointed CEO on Sept 25, 2015. He served as an executive director of Perisai from April 13, 2010 to June 1, 2017, after which he was redesignated as non-executive director. He had also worked in Bumi Armada Bhd and MISC Bhd.
On Jan 30 2018, Perisai announced Adarash’s resignation as non-executive director, citing personal reasons. Capt Adarash has since resigned from both Emas Offshore and Perisai Petroleum’s board.
Perisai officials say it will continue to focus on the regularisation plan addressing the classification of our PN17 status.
An observer says it can be challenging for Adarash to manage expectations from both companies. He probably finds it difficult to resolve the issue as he has his hands tied on a lot of matters. Being on the board of Perisai as well as the CEO of Emas Offshore, he was expected to come up with a solution to satisfy both parties.
In 2012, Perisai secured a contract from Hess Exploration and Production Malaysia BV to provide and lease a FPSO vessel and related maintenance works. To service the contract, on Dec 26, 2013, Perisai acquired a 51% stake in Emas Offshore subsidiaries Emas Victoria (Labuan) Ltd for US$89.25 mil and Victoria Production Services Sdn Bhd for RM51.
In exchange, Perisai sold a 49% stake in SJR Marine (Labuan) Ltd to Emas Offshore for US$37 mil. The result was a joint-venture vehicle in which the FPSO owned by Emas Victoria, which was renamed Perisai Kamelia, would be deployed to Hess in the Kamelia oil field offshore Terengganu.
On Jan 15 2018, Perisai terminated the shareholders’ agreement, claiming Emas Offshore had defaulted, and demanded the company sell the 49% stake in Emas Victoria for US$1.
Perisai alleged Emas Offshore’s ongoing restructuring efforts had triggered the termination clause, which requires Emas Offshore to give up its shares in the joint venture for US$1 in the event of committing any default.
Emas Offshore has denied committing any event of default. The company, according to Perisai’s announcement, asserted it remains a 49% shareholder in Emas Victoria, and disputed Perisai’s decision to terminate the agreement.
Emas Offshore giving up the shares in the agreement would mean the ownership of Perisai Kamelia would be transferred to Perisai. The company is not going to give up an FPSO for US$1. Perisai Kamelia was demobilised in 2017 following the expiry of the FPSO contract.
The ongoing saga is a case of the pot calling the kettle black. In September 2017, Emas Offshore made a similar statement, calling on Perisai to sell its 51% stake for US$1 on the ground that a separate agreement between both companies in relation to the Kamelia deal had lapsed.
For its third quarter ended Sept 30, Perisai’s net loss narrowed to RM42.17 mil fromRM293.3 mil a year ago, on revenue of RM39.89 mil, up slightly from RM38.91 mil. Perisai’s share in the joint venture resulted in a loss of RM15.06 mil versus RM47.05 mil due to provision for impairment on plant and equipment in the previous corresponding quarter, despite the expiry of the contract in May 2017.
Perisai had RM1.3 bil borrowings as of Sept 30 2017, down marginally from RM1.32 bil due to repayment of loans and conversion exchange rate. It had cash and equivalents of RM24.04 mil.
Perisai is in the process of coming up with a regularisation plan after its wholly-owned subsidiary Perisai Capital (Labuan) Inc defaulted in repaying the principal and interest for the S$125 mil, 6.875% multicurrency medium-term notes that Perisai had unconditionally and irrevocably guaranteed.
Bursa Securities has given Perisai an extension until Feb 11 2018 to come up with the plan, failing which the company may be delisted. Perisai says the proposed debt restructuring scheme is expected to be finalised with the scheme creditors by the first quarter of 2018.
As part of the plan, Perisai sought the assistance of the Corporate Debt Restructuring Committee (CDRC) to mediate with the company’s lenders on a proposed debt restructuring scheme. On Nov 9 2017, CDRC requested the lenders to observe an informal standstill and withhold litigation proceedings against Perisai with immediate effect.
CDRC is a pre-emptive measure by the government to provide a platform for corporate borrowers and their creditors to work out feasible debt resolutions without having to resort to legal proceedings. This initiative is to ensure all avenues are made available to assist distressed corporations to resolve their debt obligations.
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