FACED with the Practice Note 17 (PN17) stigma-cum-past track record of payment defaults which makes future bank borrowings difficult, Serba Dinamik Holdings Bhd certainly has a mountain to climb in its scheme of arrangement which proposes a 100% return to the company’s creditors.

Unfortunately, this often leaves the option of only ‘fire-sale’ which entails the disposal of prized assets for companies which share a similar predicament as the global integrated oil & gas (O&G) outfit.

With regard to this issue, four units of the Serba Dinamik group have filed an application under section 366 of the Companies Act 2016 for a restraining order and a leave to convene a creditors’ meeting in light of a winding up petition from its creditors.

The units comprising Serba Dinamik’s wholly-owned subsidiaries, Serba Dinamik Group Bhd (SDGB) and its indirect wholly-owned subsidiaries Serba Dinamik Sdn Bhd (SDSB), Serba Dinamik Development Sdn Bhd and SD Controls Sdn Bhd have on May 13 filed a court application for both purposes.

Recall that SDGB and SDSB are 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 bil 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 (Ma) Bhd.

“The company and its subsidiaries have identified some assets for immediate sale to generate the cash flows required to meet the Serba Dinamik group liabilities,” Serba Dinamik pointed out in a stock exchange filing yesterday (May 19).

“The company and its subsidiaries would require a court-convened meeting of its creditors to consider and if thought fit, to approve a scheme of arrangement to be proposed between the company and its creditors to restructure the debt obligations of the company and its subsidiaries.”

This is especially so given as described by Serba Dinamik “the proposed scheme of arrangement proposes a 100% return to the company’s creditors.”

Meanwhile, Serba Dinamik said the High Court has fixed June 8 to hear Serba Dinamik’s stay application, application to cross-examine and the interim liquidator applications.

According to theedgemarkets.com, the date was fixed by Justice Nadzarin Wok Nordin following a case management with the petitioners in the four cases against Serba Dinamik and its subsidiaries with the company’s legal representative via online proceedings.

“The company has also filed an application to strike out the winding up petitions and to cross-examine the deponent of the syndicated lenders to, inter alia, ascertain the true intention of the syndicated lenders (application to cross-examine),” Serba Dinamik pointed out in a separate Bursa Malaysia filing.

“The syndicated lenders have on one hand prayed for the company to be wound up and on the other hand, prayed for power to be given to the proposed interim liquidator to restructure the company.”

At 11am, Serba Dinamik was down 1 sen or 6.25% to 15 sen with 113.94 million shares traded, thus valuing the company at RM559 mil. – May 19, 2022

https://focusmalaysia.my/of-serbas-financial-squeeze-as-it-aspires-100-refund-to-creditors/