Possible change of management at Seacera, says MD

Company is seeking legal advice on the matter and further announcements will be made accordingly


Seacera Group Bhd — which is primarily engaged in the tiles and property businesses — could expect a change of management in the wake of a recent manoeuvre by its substantial shareholders to oust two existing directors from the board.

Its group MD Zulkarnin Ariffin (picture) said a change at the company cannot be discounted as the company is a public-listed entity and subject to stock market transactions.

“I cannot comment (on the future leadership of the company) but I cannot discount the possibilities,” he told The Malaysian Reserve (TMR) in a recent interview.

“Because the company is a listed company, anyone can come and buy the shares and become a major shareholder.”

Datuk Tan Wei Lian, who holds a 12.23% stake in the company, is pushing for an EGM to be held on April 29 to appoint himself and four other persons to the board, while removing two existing directors.

The two directors in question are Halim Ab Halim Ismail, chairman of Seacera’s nomination and remuneration committees, and independent non-ED Mohd Fazillah Kamarudin.

In an exchange filing last week, Seacera said it is seeking legal advice on the matter and further announcements will be made accordingly.

This is not the first time the company is subject to ownership changes after three substantial shareholders pared down their stakes early in November last year.

Non-executive chairman Datuk Seri Mansor Masikon, Zulkarnin and Datuk Ismail Osman were forced to sell interests in the company due to margin calls at the material time.

Mansor held a 0.23% indirect interest in the company as at March 25 this year, while Zulkarnin holds about a 0.52% stake, according to Bloomberg data.

It is widely speculated that interest in the loss-making and debt-saddled company is centred on its 501 acres (202.7ha) of undeveloped and unencumbered land in Semenyih.

The land — which is earmarked for a property development worth RM10 billion — carried a RM784.45 million net book value as at March 15, 2017, and could prove a key revenue generator for Seacera if a development partner can be found.

Zulkarnin told TMR that Seacera is open to selling parts of the Semenyih landbank — the company’s largest property asset — to strengthen its cash position. However, this will only be done at the right price, he said.

The management of the company is instead looking to cash call exercises geared at paying back creditors and reducing debt to help turn around its fortunes.

This will be in the form of an issuance of 149.09 million new shares at 21 sen apiece to settle the RM31.31 million owed by subsidiary companies, Seacera Ceramics Sdn Bhd and Seacera Properties Sdn Bhd, to creditors.

The company is further planning a private placement of up to 126.34 million new shares or approximately 30% of its existing issued share capital to third-party investors to be identified at a later date.

Assuming an issue price of 19.5 sen a share, the placement could raise up to RM24.64 million in gross proceeds — RM20 million or 81.2% of which will be used to repay bank borrowings. The company’s borrowings amounted to RM48.63 million as at Jan 4 this year.

Zulkarnin also said the proposals will help the company reduce its liability and avoid legal suits, while putting it in a leaner position going forward.

“Once the payment is done, we can sleep in the sense there is no legal suit from these creditors. It will be good for the company in that sense,” he said, adding that the company can then focus on its operations and business.

“Lastly, it will create more confidence for shareholders as the company is more lean. Once a lot of liabilities are settled, we will be in a stronger position.”

Both exercises were approved by Bursa Malaysia Securities Bhd last month and is now subject to shareholders’ approval.

Seacera will be further honing its maiden tiles business after disposing of a controlling interest in construction vehicle Spaz Sdn Bhd, and as its 501 acres of Semenyih landbank remain idle for the time being.

Zulkarnin said the company will hold off from expanding its current 6,000 sq m per day tile production capacity due to the soft market sentiment. Instead, the company is expanding further into the building materials business.

This includes steel, bricks, cement, electrical items, sanitary wares and fittings, and is aimed at providing positive income to the company.

“We hope it can support the company (and) contribute something to the group’s revenue this year,” he said.

Zulkarnin added that the company is expected to register an improved fiscal performance this year compared to previous years.

For the year ended Dec 31, 2018 (FY18), the company stumbled to a RM41.13 million net loss due to cost overrun and revenue falling short of overhead costs for the construction business. Impairments recognised for the tiles business also weighed on earnings that year.

This was against the RM8.92 million net profit registered the year before, while revenue in FY18 also declined 42.4% year-on-year to RM23.3 million. Turnover from the tiles business made up 82.4% of total group revenue that year.