Good money after bad
We’ve mastered the art of burning billions on lost causes.
Update: March 15, 2025, 10.40pm: The newsletter’s graphic incorrectly described the RM2 billion government guarantee for Boustead Plantations as a bailout. This error has been corrected with reference to Boustead Plantations removed.
I wanted to publish something startup-y today but that’s going to have to take a backseat.
Today’s newsletter discusses Tuesday’s announcement — the government’s bail out of oil and gas services firm Sapura Energy to the tune of RM1.1 billion.
Prime Minister Anwar Ibrahim and his team are on the back foot, pulling out all the stops to justify the move.
But the latest Sapura episode is one in a number of bailouts undertaken by the government to rescue big business — that is businesses tethered to government-linked companies.
This is panning out to be a textbook example of putting good money after bad.
Today’s newsletter breaks down:
The bailout and why — despite the government calling a “strategic investment” (it is not) — this may not be a wise thing to do.
How Sapura got itself into this mess in the first place.
An analysis of what assets could possibly be retained, sold or shut down, with some charts on the company.
You’re reading a paid version of The Malaysianist, a newsletter on money and power by writer and journalist Emmanuel Samarathisa.
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The bailout, according to Sapura’s Tuesday bourse filing, goes like this: government-owned Malaysia Development Holding (MDH) pays RM1.1 billion for redeemable convertible loan stocks that can later be converted into shares in the firm.
Funds will be used to pay off debts owed to vendors, many of which are small and medium enterprises (SMEs) heavily affected by financial difficulties, ostensibly due to the Covid-19 pandemic.
The RM1.1 billion lifeline forms part of a broader restructuring effort to tackle Sapura’s debts.
The restructuring plan, already approved by creditors and courts, is aimed at lifting the oil and gas firm from its current distressed financial state (PN17 status1) and stabilising its operations.
Naturally, this didn’t sit well with many. The spin now is that the bailout is different in that the RM1.1 billion can only be strictly used by Sapura to pay the vendors.