Perdana to provides financial assistance to Dayang?

When this was announced, I almost fell off my chair.

How could that be when everyone (unless one just started investing yesterday or arrived from Mars) knows that it is the other way.

The loan (SUKUK), RM 682.5M, offer (letter) to Dayang must have reached the desk for Board consideration. Thus, caused Perdana having to make the announcement to seek minority approval to provide “financial assistance” to Dayang as this is part of the SUKUK terms and conditions.

What is this “financial assistance”?

They are:

1. Corporate guarantees (i.e. if Dayang default, the financial institutions will seek payment from Perdana, seriously!)
2. Collaterals such as “titles” of vessels (assume there are such “titles” much like vehicles / land titles that signify ownership), etc.

all in favour of the licensed financial institutions that will be giving the SUKUK (to Dayang).

And this financial assistance not only cover:

1. RM 365M that will be advanced to Perdana to redeem Perdana’s SUKUK but the

RM 90M that Dayang advanced to Perdana in April 2019 to settle the annual payment

Total RM 455 M

2. And cover the balance RM 227.5M that Dayang will use to re-finance Dayang existing loan that has nothing to do with Perdana.

a)+b) = RM 682.5M. Strictly speaking the RM 90M Dayang advanced to Perdana is Dayang own cash and has nothing to do with the offered SUKUK. Heck, never mind, worse to come.

Item 4 of the announcement said:

Additional financial assistance to be provided by the PPB Group to Dayang in favour of the licensed financial institutions which are not directly related to PPB’s borrowings (i.e. for the purpose of partial repayment of the Dayang Group’s existing borrowings other than the PPB Group)

Financial institutions requesting such “comfort”, especially b) above is absurd (there are stronger words, but this will do).

Will this reduce risk (of default by Dayang)? Does it add value to the whole process? Should Dayang ever come to the point of default, Perdana would most likely be underwater long before.

It increases cost to secure the SUKUK, money that can productively be used to produce gain that ensure repayment.

This reinforced my view that financial institutions take away umbrella when it rains. It just destroy goodwill through such poor execution.

They are so averse to the oil and gas industries now. O&G companies that can overcome current debt crisis will not only come out stronger but will rule the waves in years to come.

Just an old man rumbling. Life is never fair.

Its friday, happy weekend, don't drink too much.