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Serba Dinamik seeks restraining order against units, proposes '100% return' scheme of arrangement to creditors

Publish date: Wed, 18 May 2022, 08:33 PM

KUALA LUMPUR (May 18): Troubled oil and gas company Serba Dinamik Holdings Bhd, which is facing a winding-up petition by creditors, is seeking a restraining order over its subsidiaries and a leave to convene a creditors’ meeting.

In a bourse filing on Wednesday (May 18), Serba Dinamik said its subsidiaries, namely Serba Dinamik Group Bhd (SDGB), Serba Dinamik Sdn Bhd (SDSB), Serba Dinamik Development Sdn Bhd and SD Controls Sdn Bhd, have filed an application for the two purposes on May 13.

SDGB and SDSB are also among Serba Dinamik’s three subsidiaries, which together with the listed entity were slapped with winding-up petitions from six financial institutions for failing to service its RM1.2 billion syndicated term financing. The lenders are HSBC Amanah Malaysia Bhd, Ambank Islamic Bhd, Bank Islam Malaysia Bhd, MIDF Amanah Investment Bank Bhd, Standard Chartered Saadiq Bhd and United Overseas Bank (Malaysia) Bhd.

A similar application for leave was also filed by Serba Dinamik’s shareholder Datuk Abdul Kadier Sahib, who owns a 16.33% stake in the group.

Serba Dinamik said it is seeking creditors’ approval for a scheme of arrangement to restructure the group’s debt obligations, which proposes “a 100% return to the company’s creditors”.

The group said it has identified “some assets for immediate sale” to generate the cash flows required to meet the group’s liabilities, it added.

Hearing for the application is fixed for Thursday (May 19).

Explaining how it got into its current financial woes, the group said in the filing that “a series of events since May 2021 has affected its cash flow, which significantly slowed down the timing of payments by customers, as well as the progress of the projects undertaken by the group".

“This had in turn led to a high inventory level and the slowing down of the conversion of inventory to cash and cash equivalent, resulting in collection to slow down,” it added.

Last month, Serba Dinamik, together with two executive directors and two senior management members were compounded a total of RM16 million for submitting a false statement involving a revenue of RM6.01 billion for the 12-month period ended Dec 31, 2020 (FY20), which was previously red-flagged by the group's external auditor KPMG.

The issue with the FY20 revenue was first raised by KPMG to the Serba Dinamik board in May 2021, which escalated into legal tussles between Serba Dinamik and regulators when the company refused to publish its special independent review.

In FY20, Serba Dinamik’s inventories jumped 81.25% to RM1.67 billion, from RM919.56 million the year before.

Shares of Serba Dinamik settled half a sen lower or 3.03% at 16 sen on Wednesday, giving it a market capitalisation of RM596.35 million. The counter is down 90% from RM1.61, when the FY20 revenue matter was first raised in May 2021.

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