KUALA LUMPUR (Sept 24): Johor-based confectionery maker London Biscuits Bhd has been slapped with a lawsuit by Kuwait Finance House (Malaysia) Bhd (KFH) for RM5.06 million in outstanding debt.

In a bourse filing today, the Practice Note 17 company said it had yesterday (Sept 23) received a writ of summons and statement of claim from Messrs Adnan Sundra & Low – the solicitors acting for KFH.

The amount due and payable was RM5.06 million as at Sept 5. The payment default was on Aug 23.

The case management has been fixed on Oct 7.

London Biscuits said it is engaging in active dialogue with the solicitors of KFH on this matter, and intends to submit a comprehensive proposal to restructure the loan facility.

"While KFH has the right to proceed with legal proceedings against the company to recover the outstanding amount, the company and its solicitors intend to work with KFH to resolve the matter amicably," it added.

London Biscuits said no business, financial and operational impact are expected from the default in payment, except that the facilities granted cannot be utilised further for working capital purposes and will limit the group to leverage the facilities for business purpose.

"The board of directors and management will continue to actively engage with KFH, as well as all other lenders to minimise any further financial impact to the operations and business activities of the company.

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

On July 8, London Biscuits slipped into PN17 status after it defaulted on a RM9.8 million in loan payment to Bank of Nova Scotia Bhd.

Earlier in February, London Biscuits’ external auditors Nexia SSY had expressed a qualified opinion on the group’s financial statements for the financial year ended Sept 30, 2018 (FY18). It had raised concern on the group’s physical inventories held at Sept 30, 2018, which were stated in the statements as RM26.89 million at the group level and RM20.79 million at the company level.

London Biscuits shares closed unchanged at 10.5 sen today, with 1.38 million shares done, bringing a market capitalisation of RM30.53 million.