SapuraCrest Petroleum Bhd executive vice-chairman and president Datuk Seri Shahril Shamsuddin will be group president and chief executive officer (CEO) of the new merged entity between the company and Kencana Petroleum Bhd.

Datuk Mokhzani Mahathir, who is Kencana CEO, will be the enlarged group’s executive vice-chairman, according to letters sent by the former and Shahril to their respective staff.

The letters, obtained by Business Times yesterday, also noted that the Securities Commission (SC) had approved the merger proposal a few days ago.

Datuk Hamzah Bakar, currently chairman of SapuraCrest, will be nominated group chairman, Shahril said in his letter.

“It is critical that we put in place a strong and dynamic organisational structure that would ensure business continuity and realisation of the synergies we hope to derive as a merged entity.

“I would like to assure each and everyone of you that you will continue to be an important part of the new organisation.

“As founding members of this new organisation, it is incumbent upon all of us to ensure that the organisation continues to grow and chart new territories as a global oil and gas player,” he said.

Mokhzani said he and Shahril had come up with a “winning management” formula.

“We have decided that we both can lean on each other to strengthen the prospects of two already successful companies. Neither will take a back seat to the other. We will both helm the company and chart its way forward.

“With the approval from SC now obtained, the journey towards merging the two companies will really begin in earnest,” Mokhzani added.

The RM11.85 billion merger will create the largest oil and gas (O&G) service provider by asset in the country.

Once completed, the SapuraCrest-Kencana group will be the world’s fifth largest oil and gas service provider.

Under their cash and share swap deal, special purpose vehicle Integral Key Sdn Bhd will buy all the assets and liabilities of SapuraCrest for RM5.87 billion and Kencana for RM5.98 billion.

Following the SC approval, the next hurdle will be for both companies to secure 75 per cent of shareholders' approval each before the deal can go through.

Shahril said SapuraCrest will call for an extraordinary general meeting (EGM) to vote on the deal on December 14.

Kencana, meanwhile, has set December 15 for its EGM.

Shahril, via Sapura Technology Bhd, owns a 40.1 per cent stake in SapuraCrest, while Mokhzani's investment firm, Khasera Baru Sdn Bhd, owns a 32.4 per cent stake in Kencana.

Other key shareholders of Sapura is Norway-based Seadrill Ltd with a 23.6 per cent stake, while Kencana has Kumpulan Persaraan Wang with a 6.8 per cent stake in it.

Both Sapura and Kencana have a common shareholder in the Employees Provident Fund with a 10.1 per cent stake and 7.8 per cent stake respectively in the companies.
(Business Times)

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The merged SapuraCrest-Kencana entity is expected to have a market capitalisation of RM10 billion as well as some RM6 billion worth of assets.
Maybank Investment Bank Bhd (Maybank IB) and CIMB Investment Bank Bhd have joined forces to entice SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd to merge and create the largest local oil and gas service provider by assets.

The merged entity is expected to have a market capitalisation of RM10 billion as well as some RM6 billion worth of assets.

A special purpose vehicle, Integral Key Sdn Bhd (IKSB), yesterday offered to acquire the assets and liabilities of SapuraCrest and Kencana Petroleum in exchange for cash and IKSB shares .

The cash portion for SapuraCrest is RM875 million or about 14.9 per cent of the deal, while for Kencana the cash portion is RM969 million or 16.2 per cent of the deal.

Under the proposed deal, Sapura-Crest and Kencana Petroleum will have equal share in IKSB, while IKSB will maintain the listing status of only one of the two companies.

The other will be delisted from the stock exchange.

The deal values SapuraCrest at RM5.87 billion, or RM4.60 a share, and Kencana Petroleum at RM5.98 billion, or RM3 a share.

SapuraCrest and Kencana's last traded prices prior to their suspension yesterday were RM4.49 and RM2.80 respectively.

"We believe the proposed merger is timely, in light of the investment cycle in the oil and gas sector, especially in exploration and production activities (upstream). Both SapuraCrest and Kencana Petroleum have commendable individual capabilities and competencies which are complementary across the value chain," Maybank IB's chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz said.

CIMB Investment executive director Datuk Charon Mokhzani and legal adviser Kadir Andri & Partners partner E. Sreesanthan were also present at the press conference.

For the deal to go through, 75 per cent of the shareholders of the two companies, respectively, must approve the offer.

SapuraCrest's major shareholder chief executive officer Datuk Shahril Shamsuddin and Kencana Petroleum's chief executive officer Datuk Mokhzani Mahathir have thus far expressed interest in the deal.

Shahril owns a direct and indirect stake of 40.1 per cent in SapuraCrest through Sapura Holdings Sdn Bhd, while Mokhzani holds a 32.4 per cent stake in Kencana through his interest in Khasera Baru Sdn Bhd.

Kencana, on its part, has appointed AmInvestment Bank Bhd as its adviser and Credit Suisse as its financial adviser. SapuraCrest, however, has yet to appoint an adviser.

Both parties were approached last Thursday with the proposal.

The board of SapuraCrest and Kencana Petroleum have 32 days to accept the offer before it lapses.

Should the offer obtain both boards' approval, the proposal by Maybank IB and CIMB Investment suggests the establishment of a merger integration committee to be co-chaired by principal shareholders, Shahril and Mokhzani.

The committee will work to iron out details of the merger before it is presented to shareholders for approval.(Business Times)

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