KUALA LUMPUR (March 27): Ireka Corporation Bhd (ICB) and its subsidiary Ireka Engineering and Construction Sdn Bhd (IECSB) were served with a writ on March 24 from AmBank (M) Bhd, claiming RM4.24 million from the group.
ICB said the RM4.24 million included a claim on overdraft facilities amounting to RM3.1 million and a claim on revolving credit amounting to RM1.14 million.
Both claims do not include any interest charges to be calculated until full settlement, the group said in a bourse filing on Monday (March 27).
“ICB will be appointing a solicitor to act on behalf of ICB and IECSB to defend the case,” the construction and property group said.
Under the writ served through AmBank’s solicitors Messrs Heiley Hassan, Tan & Partners, IECSB is named as the first defendant while ICB is named as the second defendant.
According to ICB, AmBank on Dec 12, 2007 granted IECSB a revolving contract financing line with a sub-limit of specific contract financing line of RM10 million and overdraft facilities of RM5 million, as general working capital.
On Jan 8, 2008 and Dec 31, 2012, ICB said it then executed two letters of guarantees in favour of the bank as security for the repayment of the banking facilities offered. And as part of accepting the banking facilities offer, it said IECSB has executed security documents.
“ICB undertakes to pay to the bank a payment of all monies owed by IECSB under the banking facilities offer. It was alleged that IECSB and ICB have defaulted in their obligations to make payments to the bank as required by the security documents,” ICB said.
In its capacity as the corporate guarantor, ICB said it had written to the bank on March 17 proposing a settlement agreement.
“Negotiation is still ongoing with the bank to restructure and reschedule the claimed amount over a period of nine quarters. Hence, the financial impact to ICB is considered not significant,” ICB said.
The group said there is also no impact operationally as IECSB has appointed interim liquidator Wan Idris Wan Ibrahim on Monday.
In a separate bourse filing on Monday, ICB announced that IECSB “cannot by reasons of its liabilities continue its business” and had passed and lodged the notice of resolution pursuant to Section 439(2)(a), 440(1) of the Companies Act 2016 to Companies Commission of Malaysia.
It said this development is not expected to have a material effect on the financial performance and position of ICB.
“IECSB's accounts had been deconsolidated from the ICB group's financial statements as a result of loss of control due to the appointment of an interim judicial manager on August 8, 2022,” ICB said.
“This was announced on Dec 1, 2022 during the release of the unaudited results of ICB group for the quarter ended Sept 30, 2022 (1QFY2023). The appointment of the interim judicial manager was later discontinued as announced on Jan 9.”
On July 29, 2022, IECSB applied with the High Court to be placed under judicial management, which involves the appointment of an independent judicial manager to manage the affairs of the company, in a move to prevent the company from being wound up.
ICB added that the current appointment of an interim liquidator will not have any material effect on earnings per share, gearing and net assets per share of the group. There is also no material impact on ICB group’s operating cash flow, it said.
For its 2QFY2023, ICB has announced a net profit of RM2.19 million on the back of a RM8.67 million revenue, compared to a net loss of RM24.1 million on the back of a RM38.3 million revenue last year.
It said the pre-tax profit for the 2QFY2023 is substantially represented by the effect of deconsolidation of IECSB and gain on disposal of all equity interests in Ireka iCapital Sdn Bhd, another ICB subsidiary.
Share price of ICB closed unchanged at 54 sen on Monday, valuing the group at RM123 million.