GALACTIC MISTAKES ARE, APPARENTLY, UNIVERSAL

Is there intelligent life out there?
Yes, but I’m only visiting
– Graffiti spotted in Cambridge

If we contemplate the universe’s mysteries with the world in mind, we’d have to conclude the universe sold itself short. I mean, if we are the only intelligent beings out there, then the universe seriously settled for very little.

You don’t have to look far to find examples of short change.

In the US, ostensibly the Home of the Brave and the Land of the Free, the loonies threaten to take over the asylum.

And Loony-in-Chief Donald Trump continues to place his faith in Nazi propagandist Josef Goebbels – “if you tell a lie big enough and repeat it often enough, people will eventually believe it” – because he’s still spouting the untruth that he won the last US election. Yet, he remains a contender for the next Presidency. Ye Gods!

Over in India, Premier Modi’s far-right, Hindu-First policies are sharply dividing a secular nation along religious lines. That’s a recipe for disaster.

And over here in Malaysia, we continue to pursue policies that, deep down in places that we don’t want to acknowledge, we realise are failed ones.
The monetary black hole that is oil and gas firm Sapura Energy is an Illustration of said policy.

In the mid-2000s, Sapura Energy was a high flying energy firm, which, not unlike Renong in the 1990s, grew rapidly through leveraged acquisitions. Like Renong before it, Sapura was also considered a Bumiputera company and so could always rely on the public sector for regular contracts although, in fairness, Sapura did splash out globally as well.

Everything remained fine as long as the oil and gas market remained bullish. But the markets got roiled starting in June 2014 and global investment in the industry’s upstream sector, which Sapura was heavily dependent on, crashed.

Caught between the pincers of steadily increasing debt commitments and declining revenue, the group began posting losses and by 2018 was in dire straits. As a Bumiputera firm with “strategic” assets, the market solution -bankruptcy – was out of the question. Thus, in September of that year, Permodalan Nasional Bhd, a government-linked trust agency set up to improve Bumi equity in the corporate sector, shelled out RM2.7 billion to take up a commanding 40% in the firm.

Even so, it didn’t stop RM84 million being paid to the firm’s CEO and founder Shahril Shamsuddin as compensation for the year. That was relatively more generous than the RM72 million he received a year earlier.

Despite a general recovery in the oil markets, Sapura continues to languish largely due to its crushing debt burden: RM10.7 billion at last count. Government contracts notwithstanding, it isn’t easy to make money when your annualised finance costs top RM550 million.

Sapura continues to bleed. For the nine months to October 2021, the group posted a loss of RM2.28 billion. Meanwhile, it’s become a penny stock trading at around 5 cents apiece – PNB’s entry was at 40 cents – from over RM2 in its heyday.

It’s having serious cash flow problems. But don’t look to its former shareholder for aid. The bathwater is all but gone and it will probably be up to PNB to save the baby.

Otherwise the knock-on effects could be serious. The firm’s four biggest lenders are Maybank, CIMB, RHB and AmBank. And the firm has over 650 vendors, many of whom are Bumiputera.

History has a knack of repeating itself. And Malaysia’s New Economic Policy’s past is littered with billion dollar bailouts. Whether any lessons have been learnt is doubtful.

What would our long suffering universe make of that?

ENDS