Seacera seeks to turn around via cash call exercises to cut debt

The exercises entail an issuance of new shares to settle the RM31m owed to creditors


Seacera Group Bhd is undertaking cash call exercises aimed at reducing debt to help turn around the tiling firm, with an estimated savings of RM1.24 million in annual interest payments.

The savings will be due to reduced bank borrowings, as a result from issuance of new shares and proposed private placement in Seacera.

The exercises entail an issuance of 149.09 million new shares at 21 sen to settle the RM31.13 million owed to creditors by Seacera and its subsidiary companies, namely Seacera Ceramics Sdn Bhd and Seacera Properties Sdn Bhd.

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

“In view of the weakening demand and stiff competition in the tiles industry arising from the slowdown of the property market and decline in the construction sector, we are of the view that this proposed capitalisation via the issuance of settlement shares is the better option,” Seacera group MD Zulkarnin Ariffin (picture) said in a statement yesterday.

“The reduction of bank borrowings of the group via the proposed private placement is expected to result in an estimated savings in interest payments of approximately RM1.24 million per annum,” he added.

The Malaysian Reserve (TMR) recently reported that Zulkarnin said the proposals will also help the company to reduce 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 that there is no legal suit from these creditors.

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

Seacera remains optimistic of its prospects, driven mainly by its 501-acre (202.7ha) undeveloped and unencumbered land in Semenyih, Selangor.

With an estimated gross development value of RM10 billion, Seacera expects the land to be the key revenue generator for the company.

While looking for a partner to develop the land, Zulkarnin had also told TMR that Seacera is open to dispose part of the land to strengthen its cash position. However, this will only be done at the right price, he said.

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