This article first appeared in The Edge Financial Daily on October 24, 2019

KUALA LUMPUR: Export-Import Bank of Malaysia Bhd (EXIM Bank) has terminated loan facility agreements with Barakah Offshore Petroleum Bhd after the financially-distressed company defaulted on its loans.

Barakah said its wholly-owned subsidiary, Kota Laksamana 101 Ltd (KL101), has received a notice of termination, recall, and demand from EXIM Bank, stating that it owes US$43.59 million (RM182.6 million) to the bank.

“EXIM Bank is exercising its right to recall and to terminate the facility agreements,” Barakah told the stock exchange.

“The company is still in the midst of formulating a plan to regularise its financial conditions that will include proposals to address this default,” the Practice Note 17 firm added.

In May, Barakah said KL101 had defaulted on its instalment payments to EXIM Bank of US$2.65 million, including both principal and profit, due to financial constraints.

The loan from EXIM Bank was taken for the financing of the pipe lay barge, KL 101, and monthly repayment for the loan is on a step-up basis for the duration of the loan until 2024.

It was an Islamic facility (Ijarah) and the drawn-down amount was US$57.46 million in August 2014.

In September, Barakah received a second notice of demand, stating outstanding instalment payments totalling US$3.86 million as at August, before yesterday’s announcement on the termination of loan facility agreements.

Shares in Barakah closed half a sen up at 3.5 sen yesterday, with a market capitalisation of some RM29 million.