In a bourse filing yesterday, SDHB said “(It) has defaulted on its payment for term equity and financing facilities provided” by the two banks.
SDHB defaulted on its payment to PBB on Feb 3, 2023, involving an overdraft of RM528,216 as at Jan 10.
In the meantime, SDHB had also defaulted on its payment to PIBB for a term equity financing-i amounting to RM9.58 million, a term equity financing-i amounting to RM3.24 million and a term equity financing-i amounting to RM1.29 million on Jan 11, 2023.
SDHB disclosed that both banks “have initiated legal proceedings to exercise their rights as secured creditors, as per the terms of the financing agreements”.
These two banks have taken several land and buildings owned by SDHB as collateral, which it may seek to sell in order to recover the debt and also guarantees from individuals associated with SDHB.
Despite the blow, the oil and gas services provider hopes to continue its business operations as usual.
“The company is undertaking several restructuring and cost-cutting measures together with the liquidator in an effort to reduce the cash outflows and improve cash inflows” it said.
The financially distressed company added, “The default in payment may give rise to several other potential event(s) of defaults of indebtedness”.
Should that come to pass, SDHB’s tab could climb to some RM5 billion – 342 times the amount the company defaulted on yesterday.
The High Court had previously granted a petition by six financial institutions to wind up SDHB and its three units – Serba Dinamik International Ltd, Serba Dinamik Sdn Bhd and Serba Dinamik Group Bhd over the RM5 billion owed, on Jan 10.
The company had appealed against the winding-up order.
However, on March 16, the High Court decided not to grant a permanent stay of the winding-up order as requested by the group and its three subsidiaries.
SDHB said that it is unable to provide Bursa Malaysia with a solvency declaration at the moment.
In the last quarter (Q2 FY2023), Serba Dinamik narrowed its net loss to RM89.67 million from RM290.33 million in the corresponding quarter a year ago.
At press time SDHB’s share price stood at 2 sen, unchanged for the day, giving the company a valuation of RM74.5 million.