This article first appeared in The Edge Financial Daily on September 19, 2019

London Biscuits Bhd
(Sept 18, 11 sen)
Maintain trading sell with an unchanged target price of 12 sen: London Biscuits Bhd announced that it received writ of summons and statement of claim from Malaysian Trustees Bhd (MTB), Alliance Bank Malaysia Bhd (ABMB) and Bangkok Bank Bhd (BBB).

We are concerned as the financial facilities granted cannot be utilised further for working capital purposes, putting additional strain on London Biscuits’ tight liquidity position of 0.9 times net gearing.

Furthermore, it is particularly alarming as London Biscuits had previously defaulted on a loan of RM9.8 million from the Bank of Nova Scotia on July 3, which caused the company to slip into Practice Note 17 (PN17).

The company is currently seeking solicitor’s advice on the necessary course of action. We opine that the company could monetise some of its assets to raise fresh capital.

As at June 30, London Biscuits’ net assets stood at RM1.28 per share. Overall, any revitalisation plan to uplift London Biscuits from its PN17 status will be made tougher in light of this latest development.

BBB claimed a total judgement sum of RM64.2 million under several different banking facilities (overdraft facility, term loan 1, term loan 2, revolving loan facility and combines trade facilities) along with continuing interest calculated on monthly rest until the date of full settlement.

ABMB claimed a total judgement sum of RM7.9 million under several different banking facilities (overdraft facility, term loan facility, omnibus trade line facility and Visa Infinite Business Card facility) along with continuing interest calculated on daily rest until the date of full settlement.

MTB claimed a total of RM96.7 million together with interest which shall accrue daily and be calculated monthly. — PublicInvest Research, Sept 18