London Biscuits defaults on debt payment; directors resign

This article first appeared in The Edge Financial Daily, on July 4, 2019.
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KUALA LUMPUR: London Biscuits Bhd announced yesterday that it has defaulted in RM9.83 million debt repayment to Bank of Nova Scotia Bhd (BNSB) due to “cash flow constraint”.

In separate filings, London Biscuit also saw changes in its boardroom, with executive director Datuk Wira Ranjeet Singh Sidhu and chief financial officer Loo Seng Kit resigning voluntarily, while independent and non-executive director Leslie Looi Meng resigned due to professional work commitments.

Ranjeet and Loo were appointed on June 17, while Looi was appointed in 2005. He is also an independent non-executive director of London Biscuit’s associate Khee San Bhd, according to its 2018 annual report.

According to a filing with Bursa Malaysia, London Biscuit has received a notice of demand (NOD) from the bank due to the company’s failure to pay the amounts due after the maturity dates under the facilities granted the bank.

The payment default was on May 10, 2019, said London Biscuits.

“The company is engaging [in an] active dialogue session with the solicitors of BSNB on this matter, and intends to submit a comprehensive proposal to restructure the loan facility,” said London Biscuits.

Whilst BNSB has the right to proceed with legal proceedings against the company to recover the outstanding amounts, the company and its solicitors intend to work with the bank to resolve the matter amicably, London Biscuits added.

Nevertheless, London Biscuits said the group shall endeavour to continue its other remaining business operations notwithstanding the default, and will engage with the lenders and suppliers for their continuous support.

“This is an unsecured loan, hence the issue on guarantors against the listed issuer does not arise,” the company noted.

London Biscuits’ external auditors Nexia SSY has raised red flag on the company. It has raised concern on the group’s physical inventories held at Sept 30, 2018. The inventories amounted to RM26.89 million at the group level and RM20.79 million at the company level.