KUALA LUMPUR (Feb 5): The High Court here has allowed separate applications by creditors of cash-strapped offshore fabricator and shipbuilder TH Heavy Engineering Bhd (THHE), a Ministry of Finance-owned company, and its wholly owned subsidiary THHE Fabricators Sdn Bhd (TH Fabricators) to obtain leave to commence proceedings to have the two companies placed into compulsory liquidation under Section 464(2)(d) of the Companies Act 2016 and to be placed under the court’s supervision.

The provision allows the court to order a compulsory winding up, even if the company is wound up voluntarily, if the court is satisfied that the voluntary winding up cannot protect the interests of the creditors or contributories.

Global Mariner Offshore Services Sdn Bhd, Blackstone Technology Sdn Bhd and Dynac Sdn Bhd filed the application against THHE, while Blackstone and Dynac filed separate applications against TH Fabricators.

Both THHE and TH Fabricators have already applied to be placed under voluntary winding up, and the creditors were required to obtain leave under Section 451(2) before they could apply to the court for them to enter a compulsory winding-up order.

High Court judge Ong Chee Kwan granted the order against THHE and TH Fabricators last Friday (Feb 2), following a hearing. The court also directed the creditors to file their application for a compulsory winding-up order within 30 days from Feb 2.

The decision was confirmed with The Edge by David Thomas Mathews, who represented Global Mariner, Blackstone and Dynac. Mathews appeared with Olivia Loh, Lai Ann Xing and Koh Jo Vin.

THHE and TH Fabricators, and their joint liquidators Andrew Heng and Ashvin Mahendran, were represented by Mark Ho, Eldarius Yong and Milcah Yeo.

Global Mariner, Blackstone and Dynac had sought leave as they claimed the voluntary winding-up exercise by both companies (THHE and TH Fabricators) had various breaches of statutory duties that had been carried out.

The creditors alleged that both Heng and Ashwin were in a position of conflict of interest and were unsuitable to be liquidators, as one of THHE’s former senior executives was in the same firm as Heng and Ashwin. The creditors hoped that the court could appoint independent liquidators.

Prior to this, THHE had, by a director’s resolution on Sept 8, 2023, commenced a creditors’ voluntary winding up, and had appointed Heng and Ashvin as the interim liquidators.

A creditors’ meeting was held on Oct 4, 2023, which was chaired by Ashvin.

There were no resolutions passed, as Ashvin had called off the meeting shortly after it commenced, on grounds that the meeting was not fully formed.

THHE had earlier passed a shareholders’ resolution on Sept 6, 2023 to place TH Fabricators under a members’ voluntary winding up, and had appointed Heng and Ashvin as its liquidators.

The High Court had previously recorded a consent order on Oct 30, 2023 to restrain THHE, Heng and Ashvin, or their agents from calling off a creditors’ meeting and to prevent any steps to alter the status quo, pending the decision on the creditors’ leave application.

The High Court had prior to this, also recorded a consent order to restrain them and maintain the status quo of TH Fabricators, and to restrain the transfer, disposal, sale, conveyance, distribution, encumbrance or dealings of its assets, pending the decision on the creditors’ leave applications.

End of the road for THHE

Formerly known as Ramunia Holdings Bhd, THHE is controlled by MOF-owned unit Urusharta Jamaah Sdn Bhd (UJSB), which holds a 64.45% stake in the company, following a stake transfer from Lembaga Tabung Haji (TH) back in December 2018.

The transfer was part of a rehabilitation exercise for TH, which saw the transfer of more than 100 underperforming listed companies that the Muslim pilgrimage fund invested in to UJSB.

THHE was listed on the Main Market of Bursa in January 2005, after being actively involved in the oil and gas (O&G) industry since 2002. The O&G downturn in 2014 pulled the group into the red, of which it has not been able to recover since.

The group then shifted to shipbuilding and ship repair as its core business in a move to turn around the debt-ridden company in 2018.

However, the attempt to shift focus towards building vessels such as offshore patrol vessels (OPVs) for the Ministry of Home Affairs were unsuccessful in reviving its financial standing. THHE was delisted on Sept 5, 2022.

Apart from the financial year ended Dec 31, 2019 (FY19), THHE has been loss-making since FY14.

As at end-June 2022 — the last reported financial results for the group — THHE had capital deficiency of RM210.87 million, with its total liabilities of RM393.14 million exceeded its total assets of RM182.27 million.

The tale of THHE is one that shows that even with strategic assets, a company can get caught up in an industrial downturn if it is not managed well. The group’s fabrication yard in Pulau Indah, Port Klang has the capacity to produce 10,000 tonnes of offshore structures and vessels a year, with a load out capacity of 2,500 tonnes.

The fabrication yard seems to be the only valuable asset that THHE has. In the Annual Report 2021, the last annual report published by THHE, the Pulau Indah yard carries a net book value of RM123.53 million.