KUALA LUMPUR (Dec 12): Barakah Offshore Petroleum Bhd has proposed to undertake an auction to seek a buyer for its vessel for at least US$11.4 million (RM53.28 million) in cash.
The Practice Note 17 company said it decided on the move after four proposals over the past 12 months from interested buyers for the Kota Laksamana 101 barge “had not materialised”.
“The proposed disposal offers an opportunity for Barakah to dispose of an asset that is not generating revenue/profits. Currently, the company has no existing contracts that utilises the barge,” Barakah told Bursa Malaysia on Tuesday.
Moreover, considering the group’s financial standing and the barge’s condition, retaining the barge would result in the group having to incur resources for the vessel to undergo scheduled maintenance, certification validity and physical or sea trials, said Barakah.
The group said the original cost of investment for the barge was RM334.61 million.
It added that the proceeds from the auction will be channelled to repayment of its settlement obligations.
In October, Barakah’s independent auditor issued a disclaimer of opinion on the group's application of the "going concern" assumption in preparing its financial statements for the year ended June 30, 2023 (FY2023) despite incurring a net loss of RM4 million for the year.
Barakah said auditor HLB Ler Lum Chew PLT also noted that the group’s current liabilities exceed its current assets by RM18.21 million, and that it had a deficit of shareholders’ funds of RM15.05 million.
According to Barakah's latest annual report, its total borrowings increased to RM52 million, from RM49 million in FY2022, due to fluctuations in foreign exchange rates, as the group’s borrowings are mainly in US dollars.
Barakah has appointed TS Maritime Sdn Bhd as its technical consultant for the auction and Zhejiang Shipping Exchange Co Ltd as the auctioneers and Zhoushan Yi Ge Ship Auction Co Ltd as the trustees for the auction process.
Shares in Barakah closed 0.5 sen or 12.5% lower at 3.5 sen, valuing the group at RM35.1 million.