CEO Morning Brief

Rashid Manaf Said to be Eyeing Stake in EATech

Publish date: Mon, 13 Feb 2023, 08:45 AM
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TheEdge CEO Morning Brief

EA Technique (M) Bhd (EATech), which has roughly a month to submit its financial regularisation plan to the stock exchange, might have found a white knight — Tan Sri Rashid Manaf (pictured).

The prominent businessman is said to be contemplating the possibility of taking a substantial stake in the Practice Note 17 company, according to various sources familiar with the matter.

Rashid, who is also one of the founders of Eco World Development Group Bhd (EcoWorld), might be acquiring shares from Sindora Bhd, a subsidiary of Johor Corporation (JCorp).

Through Sindora, the Johor government investment arm holds a 50.05% stake in EATech. JCorp is also an indirect shareholder of EATech through the 2.43% stake held by Kulim (M) Bhd.

Efforts to contact Rashid for his comments were unsuccessful.

Apart from being the founder of EcoWorld, Rashid has held leadership roles in other companies. He was the chairman of Perak Corp Bhd between 2020 and 2022, and the chairman of Cahya Mata Sarawak Bhd from 2018 to 2021.

He is currently the chairman and independent, non-executive director of water infrastructure company, Salcon Bhd.

The clock is ticking at EATech, which has been loss-making since the financial year ended Dec 31, 2020 (FY2020), when it recorded a huge net loss of RM105.5 million. The group also reported a net loss of RM150.6 million in FY2021.

For the nine months ended Sept 30, 2022, EATech is still RM2.94 million in the red. However, the group turned a net profit of RM5.7 million during the quarter ended Sept 30, 2022.

In December 2022, the company’s creditors, who hold 90.95% in value of its debts, approved the proposed scheme of arrangement in the court-convened meeting.

However, the company has yet to reveal the details of the scheme of arrangement.

EATech managed to obtain an order from the High Court to dispose of five vessels — Nautica Batu Pahat, Nautica Renggam, Nautica Kota Tinggi, Nautica Maharani and Nautica Muar. The court order also allows it to acquire an additional vessel to be deployed in the ordinary course of business.

However, its financial woes aren’t over yet. EATech has about one month to submit its regularisation plan to the relevant regulatory authorities for approval as well, according to its monthly update pursuant to PN17 status last Thursday. The company has appointed Ernst & Young PLT as its financial advisers to assist in the proposed scheme of arrangement.

Over the past few months, the company has been trying to sell its vessels as part of its turnaround efforts. Apart from Nautica Maharani, EATech had also sold Nautica Kota Tinggi to Petroleum Gulf Energy Trading LLC for US$4.65 million cash last year.

Nautica Maharani and Nautica Kota Tinggi are oil tankers. The cost of investment for Nautica Kota Tinggi was RM34 million, and it carried a net book value (NBV) of RM18.81 million. Nautica Maharani’s cost of investment to EATech was RM36 million, and it had an NBV of RM17.59 million.

EATech is also in the process of disposing of Nautica Renggam and Nautica Muar. It is selling Nautica Renggam to C&M Co Ltd for US$5.05 million (RM21.5 million). The company intends to fetch US$4.86 million for Nautica Muar. However, the purchaser of Nautica Muar has not been identified, according to EATech’s filing.

The disposal of Nautica Kota Tinggi will result in a net gain of RM956,000 for EATech, while Nautica Muar, if disposed of, will result in a net gain of RM791,000. However, the disposal of Nautica Maharani resulted in a net loss of RM593,000 to EATech.

EATech’s share price has been on an upward trend since September last year, climbing from the low of 3.5 sen on Sept 14. The jump has been more prominent lately. Its share price shot up more than 50% last week to 34.5 sen.

The stock, which has been off investors’ radar screens for so long, was the most actively traded in the past several days. Last Thursday, trading volume of EATech reached 76.86 million, the highest on record.

On Oct 27, 2022, EATech announced that its wholly-owned subsidiary Libra Perfex Precision Sdn Bhd had been awarded a contract by Petronas Floating LNG 1 (L) Ltd (PFLNG1) for the provision of tugboat services. The contract duration is for a fixed term of two years with an option to extend by an additional two years upon expiry, and at PFLNG1’s discretion at an agreed fixed schedule of rates. The fixed term of two years commenced in November 2022.

The contract value is about RM41.06 million, excluding the option period.

Source: TheEdge - 13 Feb 2023

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