KUALA LUMPUR (June 5): Sarawak Cable Bhd (KL:SCABLE) said it is being sued by Serendib Capital Ltd over the termination of the Memorandum of Agreement between the two parties to undertake a “resuscitation exercise” to revive the loss-making manufacturer.
In a filing with Bursa Malaysia on Wednesday, Sarawak Cable said the UK-based company is seeking declaratory reliefs, specific performance, a permanent injunction and damages in the lawsuit.
The group said it had been served with undated and unsealed copies of the legal papers by Rosli Dahlan Saravana Partnership, the law firm representing Serendib Capital.
Also named as defandants in the suit are several individuals related to the group including chairman Datuk Seri Mahmud Abu Bekir Taib, directors Yek Siew Liong, Datuk Kevin How Kow and Redzuan Rauf, former deputy chairman Datuk Sri Fong Joo Chung, group chief executive officer Russel Walter Boyd, and former company secretary Tai Yit Chan.
Sarawak Cable said it has appointed the legal firm of Dinesh Ratnarajah Partnership to "vigorously defend" the group and the other defendants.
The Practice Note 17 (PN17) group added that the legal proceedings would not have an impact on its regularisation plan.
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.
Initially given a deadline of Nov 1, 2023 to submit its regularisation plan, the group was given several extensions to resolve its PN17 status, with the latest deadline now set as Sept 30 this year.
In December 2023, Sarawak Cable said it had found a white knight in Serendib Capital, which had purportedly prepared a war chest of RM250 million to help pare down its debts, and to recapitalise the cable manufacturer “to cater to growing customer demand for infrastructure grid development and high-voltage cables”.
About five months later, Sarawak Cable said the Memorandum of Agreement it entered into with Serendib Capital had fallen through as both parties were “unable to agree upon an exclusive working relationship”.
However, Serendib Capital said in a statement that the agreement to rescue Sarawak Cable remains in force and cannot be terminated unilaterally.
Sarawak Cable recently reported its eighth straight quarterly loss due to the standstill in its credit and financing lines, and a loss on the disposal of a subsidiary.
The net loss for its third financial quarter ended Feb 29, 2024 (3QFY2024) 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 first nine months of FY2024, the group's net loss expanded to RM69.58 million from RM26.44 million previously, while revenue declined 39.9% to RM273.94 million from RM455.94 million.
As of Feb 29, 2024, the group’s cash and cash equivalents stood at RM23.85 million, while its current loans and borrowings amounted to RM381.82 million.
Shares in Sarawak Cable closed half a sen or 3.7% higher at 14 sen, giving the group a market capitalisation RM53.86 million. The stock has declined by 65.85% year to date.