This article first appeared in The Edge Financial Daily on February 14, 2019

KUALA LUMPUR: Scomi Group Bhd's subsidiary has defaulted on RM201.91 million bank facilities due to Malayan Banking Bhd (Maybank).

In a filing with Bursa Malaysia, Scomi Group said its wholly-owned subsidiary Scomi Rail Bhd received a notice of demand from Maybank for a sum of RM201.91 million, as Scomi Rail had failed to repay the bank facilities.

Scomi Group also received a notice of demand from Maybank amounting to RM113.96 million, due to Scomi Rail's default. The bank is reserving the right to dispose of the shares of a subsidiary that was secured against the bank facilities, in the event the amount demanded is not paid.

According to the filing, both Scomi Rail and Scomi Group are in the process of negotiating a resolution with Maybank. Scomi Group said there is no business, financial and operational impact from the defaults.

The default, according to Scomi Group, will give rise to an event of cross-default provision, in respect of a leasing facility amounting to RM1.29 million. Scomi Group also mentioned that Scomi Rail is not its major subsidiary.

The Edge Malaysia weekly, in its latest issue, reported that Scomi Group risks being classified as a PN17 company if it does not stem the bleed of net losses in the past 10 quarters.

It looks like the group’s current financial year ending March 31, 2019 will be loss-making as well, the report said. For the six months of the year, the group suffered a net loss of RM53.53 million on revenue of RM287.67 million. As at Sept 30, 2018, Scomi Group had short-term deposits, and cash and bank balances of RM544.3 million and RM153.13 million respectively, and short- and long-term liabilities of RM544.3 million and RM153.13 million respectively. It had also accumulated losses of RM276.13 million.

The Edge Malaysia weekly's report also noted that Scomi Group sought to do a private placement of up to 10% of its issued share capital in early June last year. At end-November, the group applied for an extension of time to undertake the exercise. It now has until June 14 to complete the placement.