Scomi Energy defaults on bond payments

by NUR HAZIQAH A MALEK/ pic by TMR FILE

SCOMI Group Bhd’s share price increased by 12.5% to 4.5 sen on Bursa Malaysia last Friday, after its subsidiary Scomi Energy Services Bhd (SESB) defaulted on the repayment of series E of the KMCOB Capital Bhd bond.

SESB shares were suspended last Thursday when it was traded at seven sen a share. Its shares resume trading today.

KMCOB has partially built up RM22 million in sinking fund and is short of about RM33 million to repay the bond’s series E.

The payment date was supposed to be on Dec 13, 2019, as the maturity date for the bond fell on the next day, which was a non-working day.

The bond was first issued on Dec 6, 2013, with an issue tenure of four years and pays semi annually with a coupon rate of 4.2%.

Despite not being able to meet the principal payment, KMCOB will be paying the bond’s coupon which falls on the same date, SESB stated in its exchange filing last Friday.

On Dec 10, SESB accepted a letter of offer from MIDF Amanah Investment Bank Bhd to provide a bridging loan to repay the bond, but the energy arm had insufficient time to fulfil the conditions for the financing drawdown before the payment date.

To address the default, KMCOB submitted a formal request to TMF Trustee Malaysia Bhd on Dec 11 to seek a remedial period from KMCOB bondholders for the settlement.

Meanwhile, SESB is expediting the conditions fulfilment to facilitate the bridging loan’s drawdown and bond settlement within the remedial period.

Currently, there is no legal implication taken by the trustees on behalf of the bondholders against KMCOB, SESB or the subsidiaries of Scomi Oilfield Ltd.

KMCOB’s nonpayment would give rise to a default by virtue of the cross default provision under the principal or financing documents for the FGI facility granted by Danajamin Nasional Bhd, whereby the principal amount outstanding was RM105 million as of Nov 30, 2019.

Similarly, it also applies for the credit facilities granted by OCBC Bank (M) Bhd and Islamic multi-option line facility by CIMB Bank Bhd, Labuan Offshore Branch, both to Scomi Oiltools Sdn Bhd with a principal outstanding amount of RM23.9 million and RM2.7 million respectively as of Nov 30.

For its first quarter ended Sept 30, SESB recorded a net profit of RM3.54 million and a revenue of RM107.89 million.

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