KUCHING: Sarawak Cable Bhd (SCB) has been ordered to be placed under interim judicial management by the Kuala Lumpur High Court.
The court made the order after allowing an application by the solicitors acting on behalf of Messrs Krish Maniam & Co to place SCB under judicial management pursuant to Section 404 of the Companies Act 2016.
The court has appointed Lim Sin Han of Messrs Sin Han & Co, Petaling Jaya, Selangor as the judicial manager of the company.
SCB, a PN17 company, said it received an originating summons filed in the Kuala Lumpur High Court on July 9 from the solicitors of Messrs Krish Maniam & Co.
On the following day, SCB said it had received a copy of the sealed order on the appointment of the Lim Sin Han of Messrs Sin Han & Co as interim judicial manager pending the disposal of the application for SCB to be placed under judicial management.
“Pursuant to the aforesaid order, the interim manager has and can undertake all functions and powers of a judicial manager given pursuant to Section 414 of the Companies Act and as stated in Schedule 9 of the Companies Act 2016 whilst waiting for the disposal of the application filed for SCB to be placed under judicial management.
“Further announcements will be made to Bursa Securities Malaysia Bhd as and when there are material developments thereof,” it added
According to a report by The Edge, Messrs Krish Maniam had acted for SCB in several ongoing legal matters, but suddenly had its services terminated on two matters, namely involving SCB’s subsidiaries Universal Cable (M) Bhd and Leader Cable Industry Bhd, where the company had appointed another legal firm.
The report said Messrs Krish Maniam had previously helped SCB in its scheme of arrangement and in finding a “white knight” in Serendib Capital Ltd for the financially-distressed company in December 2023, of which a memorandum of agreement (MOA) was formulated where the law firm was engaged with a retaining fee of RM60,000 a month.
However, sometime in May 2024, SCB terminated the MOA with Serendib Capital and replaced Messrs Krish Maniam for two of the cases. As a result, Messrs Krish Maniam had billed six invoices totalling RM345,908 for outstanding legal fees.
The law firm, according to The Edge report, claimed that SCB had not paid the outstanding sum to-date, and hence it filed the originating summons (OS) for the company to be placed under judicial management.
In an affidavit in support to the OS, the executive partner of Messrs Krish Maniam Datuk Seri S Krishna Kumar claimed that SCB’s quarterly report as at February 29, 2024 showed the company suffering losses of RM21.042 million and a cumulative loss of RM69.584 million.
Furthermore, he claimed that ongoing legal actions by Serendib Capital against SCB and its directors cast serious doubt on the ability of the current management to manage the company’s affairs.
SCB fell into Practice Note 17 (PN 17) status in September 2022 due to concerns raised by its external auditors about its viability as a going concern, after certain financial institutions suspended the group’s credit facilities.
On May 17, 2024, SCB said the MOA between the company and Serendib Capital had been validly terminated, and that the latter had been notified of and was aware of the grounds for the termination.
SCB said as any working relationship with Serendib Capital had ceased, the latter is no longer involved in any resuscitation plan for the company. Following the termination, SCB said it had identified a “strong alternative party” to carry out a resuscitation plan, and is in the process of engaging the services of professionals towards proposing and implementing that plan.
The termination came about five months after SCB announced that Serendib Capital had emerged as a white knight for the company, having submitted its interest in performing a resuscitation exercise for the company. SCB had then said that Serendib Capital is an experienced UK-based investor with over 20 years of experience in advisory and financial asset restructuring in South Asia.
SCB then said Serendib Capital had prepared a RM250 million war chest to be used to restructure and pay down SCB’s outstanding creditors as well as for an injection of capital into the company to cater to the growing customer demand for infrastructure grid development and high voltage cables.
In its legal suit against SCB for the termination of the MOA, Serendib Capital is seeking, among others, declaratory reliefs, specific performance, a permanent injunction and damages against SCB.
SCB said it had appointed Messrs Dinesh Ratnarajah Partnership to vigorously defend the company and several of its directors and officials — Datuk Seri Abu Bekir Taib, Yek Siew Liong, Datuk Kevin How Kow, Redzuan Rauf, Russell Walter Boyd and Tai Yit Chan, who were all named in the legal suit.
Meanwhile, Hng Capital Sdn Bhd, a substantial shareholder of SCB, has continued to dispose the company shares via the open market. In SCB’s latest filing with Bursa Malaysia, Hng Capital sold 222,600 shares and 349,100 shares on July 4 and July 5 respectively, reducing its shareholdings to 20,248,800 units (5.075%) from 31,256,900 (7.86%) as at September 19, 2023.
SCB share price closed at 11.5 sen on July 12, giving the company a market capitalisation of RM45.883 million.
