THHE has remained a public listed company despite being declared a Practice Note 17 (PN17) company since April 2017 after an audit opinion.
Its liabilities had exceeded its assets by RM925 million by the end of that year.
To move beyond its PN17 status, THHE must secure a clean audit opinion for the year and register two consecutive quarters of profit, along with the submission of a regularisation plan to Bursa Malaysia within 12 months.
However, Bursa has since granted a dozen extensions for THHE to submit its regularisation plan, with the latest set to expire on Oct 22.
It has been reported that the regularisation plan would likely involve a capital reduction and amalgamation exercise, proposed acquisition of a subsidiary and/or asset, as well as an issuance of new Islamic irredeemable convertible preference shares (ICPS-i).
The company needs to secure new sustainable businesses as a way to boost investor confidence to issue an ICPS-i, but there seems to be no signs of this happening.
History also suggests challenges in the issuance of ICPS-i.
In September 2015, THHE’s rights issue of up to 1.2 billion ICPS-i, at 25 sen each, was undersubscribed by 836.6 million or 69.96% of shares.
Its major shareholder, Lembaga Tabung Haji, mopped up an additional 740.79 million of the ICPS-i shares, thus pushing the total subscription to 1.1 billion shares to achieve the minimum subscription level.
Meanwhile, as of Dec 31, 2019, the company’s auditors, Deloitte, noted multiple uncertainties that cast doubt on the company’s sustainability.
Deloitte also listed an inability to determine the recoverability of RM38 million, some RM267 million in subsidiary investments and RM47 million due from subsidiaries.
It is worth noting that this is not new because on Dec 31, 2017, Deloitte said it was “unable to ascertain the ability of the group to achieve sustainable and viable operations to generate adequate cash flows from their operating activities and the timely and successful formulation and implementation of the entire proposed regularisation plan”.