RHB Investment is main adviser for SapuraCrest–Kencana merger

PETALING JAYA: SapuraCrest Petroleum Bhd's board of directors has appointed RHB Investment Bank Bhd as its main adviser and Kenanga Investment Bank Bhd as its independent adviser for the proposed RM11.85bil merger of SapuraCrest and Kencana Petroleum Bhd, sources said.

“Goldman Sachs and Morgan Stanley are being considered as the foreign co-adviser for the deal, with the board to appoint either one of these banks,” they added.

Kencana told Bursa Malaysia that its board of directors had appointed AmInvestment Bank Bhd as its adviser and Credit Suisse as its financial adviser for the offer.

Both local oil and gas (O&G) service providers received offer letters from special-purpose vehicle (SPV) Integral Key Sdn Bhd (IKSB) to buy up the assets and liabilities of both companies, to be paid for in cash and new shares in the new merged entity.

IKSB is being advised jointly by Maybank Investment Bank Bhd and CIMB Investment Bank Bhd, with the SPV being wholly-owned by Mayban Ventures Sdn Bhd.

While investment bankers earn a sizeble amount from advisory fees, another lucrative component of corporate deals comes from the provision of debt financing for these deals. Such big deals involve a cash portion to be paid by the buyer and will be raised through borrowings, in which case the bankers will provide the debt financing.

In the SapuraCrest-Kencana merger, IKSB's offer price is at RM5.87bil for SapuraCrest, which works out to RM4.60 per SapuraCrest share, and RM5.98bil for Kencana or RM3 per Kencana share.

SapuraCrest and Kencana will receive the same amount of new shares in IKSB (2.5 billion shares). It will receive RM875mil in cash while Kencana will receive RM969mil in cash upon the completion of the transaction. The debt financing for IKSB's cash payment to both companies totalling RM1.84bil will be jointly financed by Maybank and CIMB.

SapuraCrest and Kencana are set to become the largest O&G service provider by asset size of RM6bil.

Maybank IB chief executive officer Tengku Datuk Zafrul Tengku Abdul Aziz had said that directors of both companies were called in for their respective board meeting on Monday to be informed of IKSB's proposal, with Maybank and CIMB having earlier consulted the major shareholders of SapuraCrest and Kencana on the proposed deal.

The major shareholders were mainly Sapura Group's president and chief executive officer Datuk Shahril Shamsuddin and Kencana's CEO Datuk Mokhzani Mahathir.