KUALA LUMPUR (Dec 14): Fitch Ratings has further downgraded Malaysia-based energy service provider Serba Dinamik Holdings Bhd's long-term issuer default rating to "RD" (restricted default) from "C".
In a statement on Monday (Dec 13), Fitch said the downgrade follows the expiry of the 30-day grace period after the non-payment of the coupon on the group's US$222 million (about RM939.35 million) senior unsecured sukuk due in 2022.
It said potential cross-acceleration clauses in its other debt may be triggered by the non-payment of the 2022 notes.
“The 'RD' rating indicates an issuer that in Fitch's opinion has experienced an uncured payment default, but has not entered into bankruptcy filings and has not ceased operating,” it said.
At the same time, Fitch affirmed the ratings of the May 2022 sukuk issued by SD International Sukuk Ltd and the sukuk due March 2025 issued by SD International Sukuk II Ltd at "C", with the recovery rating remaining at "RR4".
The rating revision came after Fitch had, on Nov 12, downgraded Serba Dinamik's long-term issuer default rating to "C" from "CCC-" after Serba Dinamik missed the interest payment on the 2022 senior unsecured sukuk and entered the 30-day grace period.
On Monday, Serba Dinamik said it had yet to receive any notice of default in response to its outstanding US$222 million sukuk, in response to a query from Bursa Securities on news reports that the group had failed to pay the senior Islamic bond's US$7 million semi-annual coupon payment on conclusion of the 30-day grace period that ended on Dec 9.
“Please be informed that Serba Dinamik Holdings Bhd and its group of companies have yet to receive any notice of default in respect of the outstanding US$222 million sukuk. The group shall update from time to time, should there be any new development,” Serba Dinamik said in its filing then.
Besides Fitch, Malaysian Rating Corp Bhd and S&P Global Ratings have also downgraded Serba Dinamik's credit rating, citing the missed coupon payment.
Trading in the shares of Serba Dinamik has been suspended since Oct 22, after it failed to disclose the findings of a special independent review undertaken by Ernst & Young Consulting Sdn Bhd (EY Consulting) about an audit issue flagged by its then external auditor KPMG in May about some allegedly questionable transactions worth over RM4.5 billion.
Since then, the group, which is in legal tussles with Bursa Securities and EY Consulting, as well as KPMG over the audit issue, has also failed to submit its annual report for the financial year ended June 30, 2021 on time, despite getting a one-month extension up to Nov 30 to submit the report, together with its annual audited financial statements, as well as auditors' and directors' reports.
The group's shares last settled at 35 sen, giving it a market capitalisation of RM1.3 billion.