KUALA LUMPUR (Sept 27): Dolomite Corp Bhd has applied for a judicial management order which will enable the company to undertake a financial restructuring scheme in a bid to prevent it from being wound up.
The application comes after it was served with a notice by the solicitors of Maybank International Labuan Branch over debts amounting to US$38.19 million (RM160 million) together with cost awarded by the court amounting to RM13,520.
The outstanding amount is almost seven times Dolomite's market capitalisation of RM24 million.
Dolomite is an investment company and is the parent company of 14 subsidiaries, which are principally involved in property development, construction and sand mining activities.
The company had net liabilities of RM59.574 million as at Dec 31, 2020, it said in a filing with bursa Malaysia.
According to Dolomite, the company is facing the possibility of winding up as it is highly likely to be unable to pay its debts as its liabilities have far exceeded its assets.
It also has been classified as an affected listed issuer under Practice Note 17.
Against this backdrop, the company believes that the making of the application for judicial management order would be likely to achieve one or more of the following purposes set out in Section 405 (1)(b) of the Companies Act 2016, namely "the survival of the company, or the whole or part of its undertaking as a going concern; the approval under Section 366 of a compromise or arrangement between the company and any such persons as are mentioned in that Section; a more advantageous realisation of the company's assets would be effected than on a winding-up".
"Upon the appointment of a judicial manager, the advice and the expertise of an insolvency practitioner will be able to nurse the financial health of the company that will allow the company the chance of obtaining a greater recovery of the debts owed to all of its creditors and/or increase its effort to reduce its debts which will ultimately benefit all of the company's creditors," it added.
Shares of Dolomite closed unchanged at four sen today. Year-to-date, the stock has fallen 67% from 12 sen on Jan 4, 2021.