Early redemption proposal
Cypark Renewable Energy Sdn Bhd (Cypark) has proposed the early redemption of its tranche 1 perpetuals, covering series 1 to 10.
Under the proposal, sukukholders will receive
1) the principal amount at par value (100);
2) all outstanding periodic distributions up to the early redemption date, including the three deferred coupon payments; and
3) interest on interest portion, accrued up to the early redemption date
While the exact redemption date is yet to be announced, it will be determined once necessary financing arrangements are secured, and subject to the passing of resolutions in the upcoming EGM dated 7 October 2025 (Tuesday).
To proceed, Cypark will require at least 75% consent from sukukholders. If approved, the scheme will be binding on all sukukholders.
Cypark’s management has indicates that the redemption (timeline) is expected to occur before the next coupon distribution date in March 2026. This is likely linked to the earlier announcement where the group has secured RM1.3 billion in financing from MBSB Bank.
Our view
We view Cypark’s proposal to be sincere, as sukukholders are offered full financial recovery without any principal loss. This stands in contrast to other issuers who have previously undercut investors during restructuring or redemption events.
This development echoes well with our ‘hold/wait and see’ recommendation iterated in our previous articles, and now we believe investors will be better off by voting favourably on Cypark’s early redemption proposal.
Our view is based on the following considerations:
1) perpetual structure allows issuer to defer coupon by giving irrevocable optional deferral notice;
2) issuer may opt for non-call, prolonging investors’ capital indefinitely;
3) Cypark is not entirely out of the woods yet from its past financial struggles
Given these risks, we recommend investors to vote* favourably on this scheme, recovering the principal and redeploy the capital elsewhere.
* We’re currently preparing the voting options for bondholders and will share them with you as soon as possible.
Declaration: For specific disclosure, at the time of publication of this report, iFAST Capital Sdn. Bhd. (via its connected and associated entities) and the analyst who produced this report hold a NIL position in the abovementioned securities.