Issuance of redeemable convertible unsecured Islamic debt securities and Sukuk Murabahah pursuant to schemes of arrangement of entities in Vantris Energy Berhad group
The issuance of redeemable convertible unsecured Islamic debt securities (“RCUIDS”) and the various Islamic medium term notes (“Sukuk Murabahah”), based on the Shariah principle of Murabahah (via Tawarruq arrangement), were an integral component of the composite scheme comprising court-sanctioned and creditor-approved schemes of arrangement undertaken by 23 entities within the Vantris Energy Berhad (formerly Sapura Energy Berhad) group (“Issuers”). The composite scheme comprised one of the largest and most complex distressed restructurings in Malaysia to date involving over RM12 billion equivalent in debt and thousands of creditors, including financial institutions and trade creditors, both foreign and domestic.
The complex mechanics of the composite scheme involved the wholesale novation of debts from scheme companies to Vantris Energy Berhad and the onward assumption of certain liabilities by the Sukuk issuers, all on the restructuring effective date. The RCUIDS and multi-currency Sukuk Murabahah were issued under the principle of Qalb al-Dayn on the restructuring effective date in part-settlement of outstanding liabilities of the scheme companies, as novated to Vantris Energy Berhad.
In the case of the Sukuk Murabahah, these were issued to financial institutions holding pre-existing sukuk murabahah issued by Sapura TMC Sdn. Bhd. Both the RCUIDS and the were also issued on the basis of novel “payment in kind” profit payments. The documentation for the Sukuk Murabahah issuances was made more complex by the existence of intercreditor arrangements with unsecured creditors in the same class receiving conventional debt as settlement in lieu of sukuk, as well as the need to ensure general economic parity with such unsecured creditors as far as possible.
Advising the Issuers was Managing Partner Azman bin Othman Luk.
