KUALA LUMPUR (Dec 12): Sarawak Cable Bhd (SCB), a Practice Note 17 (PN17) company, announced that it had found a white knight in Serendib Capital Ltd to undertake a “resuscitation exercise” to revive the loss-making manufacturer.

SCB’s share price made a big leap on Tuesday, soaring 10 sen to 16 sen as at 3.40pm, with 38.38 million shares traded. Its market capitalisation swelled to RM79.8 million.

SCB revealed in a statement filed with Bursa Malaysia that UK-based Serendib Capital had prepared a war chest of RM250 million to help pare down its debts, and to recapitalise the cable manufacturer “to cater to growing customer demand for infrastructure grid development and high-voltage cables”.

However, SCB did not disclose in detail whether the RM250 million will be given as a loan or an equity injection.

SCB’s external auditor Baker Tilly Monteiro PLT issued a disclaimer opinion in May, pointing out that its financial position for the financial year ended May 31, 2023 and its PN17 status indicate material uncertainties that may cast significant doubt on its ability to continue as a going concern.

As at Aug 31, SCB’s current liabilities amounted to RM388.75 million, of which 84% were secured loans, while long-term debts stood at RM11.67 million. The company’s cash balance, excluding the overdraft and deposits pledged, was at RM19.42 million.

Furthermore, the company was sitting on accumulated losses of RM296.42 million as at end-August, resulting in a negative shareholder equity of RM76.6 million.

“We see this partnership as an extremely positive development in the path to restructuring our financial commitments at SCB, and we look forward to leveraging the financial firepower and turnaround expertise of Serendib Capital, so that we can focus on aggressively delivering on our RM900 million order book,” said Russel Walter Boyd, the group chief executive officer of SCB, in the statement.

According to SCB, Serendib Capital is “an experienced UK-based investor, holding over 20 years of expertise in advising and restructuring financial assets across South Asia”.

Its achievements included the successful restructuring of LankaBangla Finance, yielding investors over 50 times the invested capital.

“We are delighted to commit to partnering and investing with SCB, the largest power cable manufacturer in Malaysia, and a leading manufacturer regionally. The quality of SCB’s customer base and manufacturing capabilities are second to none.

“We eagerly anticipate cleaning up whatever lingering legacy issues still remain, and to restore and surpass SCB as compared to its former glories, as we build this business into a regional powerhouse,” said Takeo Hirata, an adviser to Serendib Capital and a non-independent non-executive director of SCB.

Hirata was appointed to the board on Dec 6.

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