This article first appeared in The Edge Malaysia Weekly on June 2, 2025 - June 8, 2025

LAST Thursday, Barakah Offshore Petroleum Bhd’s (KL:BARAKAH) board of directors announced “with regret” that the company “has exhausted all available avenues” to regularise its financial condition and operations.

“As such, the company has decided not to submit an appeal to Bursa Securities against the delisting within the appeal time frame, [that is] on or before May 29, 2025,” said Barakah, a licensed Petronas vendor, in its filing with the stock exchange.

Consequently, Barakah’s shares have been suspended from trading since last Friday and the counter will subsequently be delisted on Wednesday (June 4).

Investors who have not been keeping track of the company would likely imagine that Barakah must be debt-laden and cash-strapped, besides bleeding red ink — the common syndromes of most Practice Note 17 (PN17) companies.

However, those familiar with the company would have been puzzled by the board’s decision not to appeal against the exchange’s decision to remove Barakah’s listing status, given its latest financial results.

Based on the company’s latest balance sheet as at March 31, 2025, its cash and cash equivalents had swelled to RM88 million from RM54.5 million as at end-June last year. That implies a net cash position of about RM40 million after taking into account its short-term borrowings of RM48.75 million, translating to a net cash per share of 3.99 sen. The stock was last traded at 0.5 sen before the trading suspension.

The receipt of an adjudication sum of RM78.8 million helped expand its cash coffers to above RM80 million in the second financial quarter ended Dec 31, 2024 (2QFY2025). Barakah booked the lump sum as other income, which ballooned to RM80.4 million in 2QFY2025. As a result, it posted a net profit of RM40.7 million. It is understood that the RM78.8 million came from its unit PBJV Group Sdn Bhd’s adjudication claim against EnQuest Petroleum Production Malaysia Ltd in relation to offshore works secured under a five-year contract in 2018.

In a nutshell, Barakah is not entangled in debts. The company should not have any major problem paying off its debts, including the outstanding amount that it has owed to Export-Import Bank of Malaysia Bhd (EXIM Bank) for many years.

Also included in the company’s balance sheet are RM35.09 million worth of non-­current assets held for sale, which are likely linked to its pipe-laying barge Kota Laksamana 101, which is housed under KL 101 Ltd.

Kota Laksamana 101 has been idle since September 2019. Some quarters are of the view that the vessel might be considered a prized asset. Nonetheless, the sale will still bring in a couple of million in US dollar terms, at least.

Barakah, in total, has submitted three regularisation plans since it slipped into PN17 status in 2019. But it withdrew all three plans for different reasons.

Just seven months ago, Barakah came up with a regularisation plan to meet the Oct 30, 2024 deadline, which had been extended several times by the exchange.

Shortly before the submission of the restructuring plan, Datuk Seri Nik Hamdan Daud was redesignated as the company’s executive chairman from president, succeeding Datuk Mohd Zaid Ibrahim. Meanwhile, Datuk Seri Azman Shah Mohd Zakaria, who is Nik Hamdan’s person acting in concert, took on the post of president. He was the deputy president previously.

Nik Hamdan is Barakah’s single largest shareholder with 169.89 million shares or a 16.94% stake, after the transfer of shares from his son Nik Azri Syazwi Nik Hamdan and acquiring 66.86 million shares or a 6.67% stake in the open market last September. Concurrently, another substantial shareholder, Baxtech Resources Sdn Bhd, also exited Barakah after selling its 6.67% stake in the open market. 

Other shareholders include Dakota Integrated Services Sdn Bhd (6.35%), Eureka Efektif Sdn Bhd (3.33%) and Magnadrive Sdn Bhd (3.23%).

Barakah’s third proposal involved a capital reduction of RM195 million to wipe out its accumulated losses of RM100 million, a three-into-one share consolidation, an issuance of 62.5 million new shares to Nik Hamdan to raise RM7.5 million plus an employee share scheme of up to 15% of its issued share capital.

However, less than three weeks after the submission, Barakah withdrew the plan, telling Bursa that it needed to reformulate a new proposal upon receiving an adjudication sum of RM78.8 million, alongside updates on tendering contracts.

Six months on, Barakah’s board seems to have lost momentum in pursuing its regularisation plans despite the strengthened cash reserves.

It is worth noting that the past proposals were made against the backdrop that Barakah’s creditor EXIM Bank had in April 2021 agreed to waive the sum of US$23.33 million (RM98.9 million) in a debt settlement agreement. 

As part of the debt settlement scheme, EXIM Bank agreed to a settlement of the outstanding debt of US$9.38 million by PBJV Group — an indirect wholly-owned subsidiary, according to Barakah’s filings. The outstanding sum was supposed to be settled via quarterly instalments from July 30, 2021 until April 30, 2024.

Despite its creditor taking a haircut, Barakah was unable to fulfil the repayment obligations.

Last September, EXIM Bank indicated that subject to the bank’s approving authority, it is supportive of a repayment of US$9.54 million (net of transaction costs) to be made using proceeds from the disposal of Kota Laksamana 101. The remaining US$1.45 million would then be settled via a repayment schedule to be determined later.

Barakah found a buyer — PT Wintermar Rajawali Asia — for the barge for US$9.7 million cash last October, though the price was lower than the minimum disposal consideration of US$11.4 million that was approved by Barakah’s shareholders.

In an unexpected twist, Barakah cancelled the barge sale after the preliminary agreement for the deal lapsed on Feb 28 this year. The company has said it is already in active talks with several other potential buyers to finalise the disposal of the barge, while simultaneously negotiating revised payment terms with EXIM Bank for its outstanding debt.

Prior to last Friday’s trading suspension, Barakah’s share price had seen strong selling pressure as minority shareholders had likely rushed to sell their shares, so as not to be left with illiquid securities post-suspension.

Barakah told its shareholders that upon the delisting of the company, it will continue to exist but as an unlisted entity.

“The company is still able to continue its operations and business and proceed with its corporate restructuring and its shareholders can still be rewarded by the company’s performance.

“However, the shareholders will be holding shares that will no longer be quoted and traded on Bursa. The interests and rights of the shareholders will remain safeguarded under the Companies Act 2016,” it said.

To put it bluntly, would it be naïve to believe that minority shareholder interest and rights will still be protected, regardless of whether the shares that they hold are in a public-listed or non-listed entity? 

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