by ASILA JALIL / graphic by MZUKRI MOHAMAD

SERBA Dinamik Holdings Bhd confirmed it has defaulted on its US$222.22 million (RM939.99 million) sukuk, and it could significantly impact the group’s financial performance.

Serba Dinamik’s wholly owned subsidiary, SD International Sukuk Ltd, defaulted on the sukuk on Dec 9, which was the deadline to pay US$6.5 million in interest payment initially due in November.

It said SD International was unable to meet its obligation to pay the interest on its US$222.22 million sukuk due to cashflow constraints. The constraint was brought about by the pandemic which resulted in unfavourable conditions in the company’s operation.

It added that the business operations of the group will not likely be affected by the default in payment and it will continue its business and operations despite the default.

“However, the default in interest payment may significantly impact the financial performance of Serba Dinamik group. The company will be in close communications with its financiers to minimise any financial impact that may arise from the default.

“The default in payment will give rise to several other potential events of default of the indebtedness under the company by virtue of the cross-default provision under the respective financing agreements,” it said.

The company also triggered the Practice Note 17 (PN17) criteria on Dec 9 but was saved from being classified under the criteria due to the Covid-19 pandemic relief measures granted by Bursa Malaysia Bhd, the oil and gas service firm said in a Bursa filing yesterday.

“The board of directors of Serba Dinamik wishes to announce that the company had on Dec 9, 2021, triggered the following prescribed criteria as set out in Paragraph 8.04 and Paragraph 2.1(f) of PN17 — Criteria and Obligations of PN17 Issuers of the Main Market Listing Requirements (MMLR) of Bursa Malaysia,” it said in the filing.

On June 16, Bursa Malaysia had granted affected listed issuers relief from complying with the obligations under Paragraph 8.04 and PN17 of the MMLR from July 1 until Dec 31, 2021.

Under the PN17 Relief Measure, affected listed issuer that triggers any of the PN17 Suspended Criteria during the relief period will not be classified as a PN17 listed issuer and does not need to comply with the obligations pursuant to Paragraph 8.04 and PN17 of the MMLR for a period of 18 months from the date it triggered the criteria.

Listed issuer, however, must immediately announce that it has triggered the criteria and the relief provided. It then needs to reassess its condition and announce if it continues to trigger any of the PN17 criteria, upon expiry of the 18 months.

“Pursuant to the above-mentioned PN17 Relief Measures, Serba Dinamik will not be classified as PN17 affected listed issuer,” said Serba Dinamik.

The PN17 relief measures by Bursa Malaysia are granted to listed issuers that trigger criteria under PN17 of the MMLR. Among the criteria is if the shareholders’ equity on a consolidated basis is 25% or less of its share capital (excluding treasury shares) and such shareholders’ equity is less than RM40 million.

Besides default in payment, a company will trigger the criteria if the auditors have highlighted a material uncertainty related to going concern or expressed a qualification on the listed issuers’ ability to continue as a going concern in its latest audited financial statements.