KUALA LUMPUR (May 8): Sarawak Cable Bhd (KL:SCABLE) has to go back to the drawing board and look for a new white knight to regularise its financials.
The Practice Note 17 (PN17) company announced that the Memorandum of Agreement it entered with Serendib Capital Ltd has fallen through.
Both parties are “unable to agree upon an exclusive working relationship governed by a Memorandum of Agreement entered on Dec 29, 2023”, according to its bourse filing.
The loss-making cable manufacturer said it would provide further updates if there is any development regarding this matter.
In December last year, Sarawak Cable said the UK-based Serendib will undertake a “resuscitation exercise” to revive the company.
In a previous statement, Sarawak Cable said that Serendib had prepared a war chest of RM250 million to help pare down its debts and recapitalise the company to cater to growing customer demand for infrastructure grid development and high-voltage cables.
The details of the “resuscitation exercise” were not revealed. However, the news lifted Sarawak Cable share price from around six sen to 42.5 sen within a month.
Sarawak Cable’s share price fell 0.5 sen to 15.5 sen on Wednesday, giving it a market capitalisation of RM61.84 million. The stock has declined 62% year-to-date.
The largest shareholder of Sarawak Cable is its chairman, Datuk Seri Mahmud Abu Bekir Taib, the second child of late Tun Abdul Taib Mahmud. He currently holds an 18.63% stake. Sarawak Energy also holds a 13.13% stake in the company.
Sarawak Cable fell into PN17 status in September 2022 due to concerns raised by its external auditor about its viability as a going concern, after certain financial institutions suspended the group's credit facilities.
The company’s deadline to submit its regularisation plan has been extended several times. The latest deadline is on Sept 30.
It has been loss making for eight consecutive quarters.
For the financial quarter ended Feb 29, 2024 (3QFY2024), Sarawak Cable’s net loss widened to RM21.04 million from RM14.16 million a year earlier, while revenue declined 43% to RM74.43 million from RM130.55 million.
For 9MFY2024, its net loss expanded to RM69.58 million from RM26.44 million in 9MFY2023, while revenue declined 39.9% to RM273.94 million from RM455.94 million.
As of end-February 2024, the group’s cash and cash equivalents stood at RM23.85 million while its loans and borrowings amounted to RM393.24 million.
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