KUALA LUMPUR (May 13): Serendib Capital Ltd said on Monday an agreement to rescue Sarawak Cable Bhd (KL:SCABLE) remains in force and cannot be terminated unilaterally.
Sarawak Cable’s announcement last Friday (May 10) of a “strong alternative party” keen on reviving the company was not discussed with any of the directors representing Serendib, the UK-based firm said in a statement. Serendib was also not notified ahead of time as required, it noted.
Serendib intends to fulfil all of its obligations under the memorandum of agreement (MOA) signed in December 2023 with Sarawak Cable, the firm stressed.
Last Friday, Sarawak Cable said it was unable to agree on a working relationship with Serendib amid a delay in proposing and implementing any debt settlement with the company's creditors under the MOA.
Sarawak Cable stopped short of saying that the agreement was terminated, and only said that “the termination of the memorandum of agreement would not, in the company's view, have an impact on the company's PN17 (Practice Note 17) regularisation plan”.
That means the agreement has not been terminated and remains in force, Serendib said. “This threat is now being attended to by Serendib’s lawyers,” the firm said.
Serendib stressed that it has put forward a “transparent, credible plan that secures the future of the company” after close to five months of negotiations with creditor banks of Sarawak Cable.
The plan is still in progress as the settlement involves 13 banks, Serendib insisted.
The loss-making cable company 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, with the latest deadline set for Sept 30.
The company 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 the nine-month period (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.
The largest shareholder of the group is its chairman Datuk Seri Mahmud Abu Bekir Taib, the second child of the late Tun Abdul Taib Mahmud. He currently holds an 18.63% stake. Sarawak Energy also holds a 13.13% stake in the company.
As at the time of writing on Monday, shares in Sarawak Cable traded unchanged at 14 sen, valuing the company at RM55.86 million.