KUALA LUMPUR (Aug 5): The High Court of Kuala Lumpur has allowed RHB Bank Bhd’s (KL:RHBBANK) application for a summary judgement against Ireka Corp Bhd (KL:IREKA) for the bank's RM6.53 million claim over an alleged default in a revolving credit facility.
According to the group's bourse filing, the summary judgement entails a court order for Ireka, as the corporate guarantor for the revolving credit facility granted to its wholly owned subsidiary Ireka Engineering & Construction Sdn Bhd (IEC), to pay the revolving credit amounting to RM6.53 million up to Dec 31, 2023.
The construction outfit, which is currently in Practice Note 17 status, is also ordered to pay interest on the facility at a rate of 3.5% per annum from Jan 1, 2024, on the base loan rate of 6.7% per annum until the date of full settlement.
On top of that, the court also ordered Ireka to pay incidental cost of RM7,500 and an allocator fee of RM300.
"There is no material and financial impact as the amount has already been provided in the financial statements of the company," the group said.
"Following several discussions with the bank, the company is currently in the midst of negotiation with the bank to honour the court order," Ireka added.
On Feb 13, RHB Bank filed a lawsuit against Ireka, claiming RM6.53 million over an alleged default in a revolving credit facility. The bank had granted the revolving credit facility of RM6.5 million in 2015 and 2017 to IEC, which has been under liquidation since March 2023.
In June 2023, Ireka entered into a settlement agreement with RHB Bank to pay off all monies owed by IEC under the banking facility. The bank later terminated the settlement agreement six months later in December after the company defaulted in its obligations to make such payments under the arrangement.
Following the termination of the settlement agreement, Ireka said it had further proposed a revised scheduled payment to the bank on Dec 22 last year. However, the proposed terms of repayment were not agreeable by the bank.
Ireka has been loss-making for the last five consecutive quarters since its third financial quarter ended March 31, 2023 (3QFY2023).
Most recently, the company reported a narrowed net loss of RM194,000 for 3QFY2024, against net loss of RM60.41 million a year earlier. This was achieved despite quarterly revenue halving to RM3.54 million from RM7.13 million previously.
As of March 31, 2024, Ireka had a cash and bank balance of RM6.53 million with short-term borrowings of RM7.98 million and long-term borrowings of RM67.61 million.
In May, the Employees Provident Fund initiated legal action against Ireka's wholly owned subsidiary Ireka Development (Terengganu) Sdn Bhd and the unit's directors over alleged unpaid contributions to the provident fund, adding to the list of lawsuits the group is currently facing over separate defaults in payments.
Shares in Ireka closed unchanged at 33.5 sen on Monday, as its market capitalisation stood at RM68.34 million. Year to date, the counter has declined by 33%, or 16 sen.