Deleum Berhad 2026 Shareholders’ Circular: Key Details for Investors

Overview

Deleum Berhad has released a comprehensive Circular and Statement to shareholders, outlining two major proposals to be tabled at its 21st Annual General Meeting (AGM) on 22 June 2026:

• Proposed Renewal of Shareholders’ Mandate for Recurrent Related Party Transactions (RRPT)
• Proposed Renewal of Share Buy-Back Authority

Both proposals, if approved, are likely to have implications for the company’s operations, governance, and potentially its share price. Below, we detail the key points, implications, and considerations for investors.

1. Proposed Renewal of Shareholders’ Mandate for RRPT

Key Points

• The mandate will allow Deleum Group and its subsidiaries to enter into RRPTs with specified related parties, within estimated value limits and subject to annual renewal.
• These transactions are expected to occur frequently and are necessary for day-to-day operations. The renewal facilitates swift execution of business deals with related parties, without the need for repeated shareholder approvals.
• All RRPTs must be conducted at arm’s length and on commercial terms not more favorable to related parties than those available to the public.
• There are strict review procedures in place, including quarterly Audit Committee oversight and disclosure requirements in the annual report.
• Estimated RRPT values for the upcoming mandate period are substantial, notably:
• STICO: RM510 million (gas turbine overhaul, technical services, parts)
• Dresser Italia: RM150 million (valves and spare parts)
• Lat60: RM15 million (satellite-based methane emission monitoring)
• OSA II/OSA MI: RM70 million (valves, parts, engineering services)
• Actual RRPT values in the previous mandate period did not exceed estimates by more than 10%, and all credit terms were met.

Important Shareholder Considerations

• Potential Price Sensitivity: The scale of RRPTs with STICO and Dresser Italia (over RM600 million combined) could materially influence Deleum’s revenue, cost structure, and profit margins.
• Related Party Interests: Datuk Vivekananthan a/l M.V. Nathan, a major shareholder and director, is involved in RRPTs via Lat60. He and any persons connected will abstain from voting on the relevant resolutions.
• Audit Committee Endorsement: The Committee has assessed that the RRPTs are fair, reasonable, and not detrimental to minority shareholders.
• Business Rationale: Partnerships with global OEMs and technology providers are seen as a competitive advantage, allowing Deleum to access expertise, new markets, and enhance its offerings in oil and gas services.
• Governance: Approval is subject to strict internal controls, delegated authority guidelines, and transparency in reporting.

2. Proposed Renewal of Share Buy-Back Authority

Key Points

• The Board seeks authority to buy back up to 10% of Deleum’s issued shares (max 40,155,350 shares, based on current capital).
• Buy-back can be funded from retained profits (RM22.6 million as at Dec 2025) or internal resources; external borrowings are permitted if company finances allow.
• Shares bought back may be cancelled, retained as treasury shares, resold, transferred under employee share schemes, or used as dividends.
• Share buy-back price must not exceed 15% above the weighted average market price for the previous five trading days. Resale or transfer must be at least at the weighted average price or up to 5% below it, subject to timing and cost rules.
• Buy-back will not be executed if it causes public shareholding spread to fall below 25%.
• No buy-backs, resales, or cancellations occurred in the previous 12 months.

Potential Impact and Shareholder Considerations

• Price Sensitivity: Buy-back could reduce the float, increase EPS, and potentially support the share price, especially if shares are undervalued. The effect is more pronounced if purchased shares are cancelled, reducing total issued capital.
• Mandatory Offer Risk: If any shareholder or concert party crosses 33% or increases their stake by 2% between 33%-50%, a mandatory offer may be triggered under the Malaysian Code on Take-Overs and Mergers. The Board intends to avoid this scenario.
• Shareholder Structure: Share buy-back will increase the proportional ownership and voting rights of major shareholders; this could impact governance and control dynamics.
• Financial Effects: Buy-back uses retained profits and may temporarily reduce working capital and resources available for dividends or investment. Conversely, resale of treasury shares may recover capital if sold at a premium.
• Historical Share Price: Deleum shares traded between RM1.19 and RM1.69 over the past year, with the last price at RM1.19. The buy-back may help stabilize or uplift the share price if implemented.

3. Material Litigation

Key Points

• Deleum Technology Solutions Sdn. Bhd., an indirect subsidiary (86.67% owned), initiated a legal suit (Suit 544) for RM34.37 million against former employees and others over alleged fraud, breaches of fiduciary duty, and dishonest assistance.
• Settlement agreements have resolved claims with most defendants, and outstanding counterclaims have been withdrawn or settled. Final assessment of damages for two remaining defendants is scheduled for 21 May 2026, following
  

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