This article first appeared in The Edge Financial Daily on July 16, 2019

KUALA LUMPUR: China-based shoe manufacturer Multi Sports Holdings Ltd and construction firm Southern Score Sdn Bhd have aborted plans to form a new company (newco) to take over and assume Multi Sports’ listing status.

The plan was part of efforts to regularise Multi Sports’ finances and lift itself out of Practice Note 17 (PN17) status.

In a filing with Bursa Malaysia yesterday, Multi Sports said the memorandum of understanding (MoU) it had signed with Southern Score lapsed on July 5 and no further extension was sought.

“The company will continue with its efforts to work on regularisation of its operational and financial condition and an announcement on any development will be made in due course,” it added.

Under the MoU, Southern Score was to have issued up to RM9 million worth of newco shares to the existing shareholders of Multi Sports, and up to RM6 million worth of newco shares as full and final settlement of the accrued liabilities and debts outstanding to Multi Sports’ creditors.

On Nov 13, 2017, Multi Sports slipped into PN17 status after its external auditor Messrs RT LLP issued a disclaimer of opinion in respect of Annual Report 2015.

Among the concerns highlighted by the external auditor were its inability to obtain sufficient audit evidence with regard to inventories, investment in subsidiaries, tax provisions, litigation and risk to fraud.