KUCHING: Sarawak Cable Bhd is currently in negotiations with its creditors for a new debt restructuring scheme.
The creditors rejected the previous restructuring proposals during a recent court meeting.
The company, which is under PN17 status, stated that it is addressing the concerns raised by the creditors.
In an update on the debt restructuring exercise, Sarawak Cable expressed optimism that an agreement will be reached to rehabilitate the group’s financial position and prospects.
During the court meeting on September 26, 2023, the group proposed a total of 10 debt restructuring schemes.
Eight schemes were approved, while two were rejected.
However, due to inter-conditional requirements among the proposed schemes, the overall restructuring scheme did not pass. Regarding the proposed disposal of equity interest in PT Inpola Mitra Elektrindo (PT IME) to KAB Energy Holdings Sdn Bhd (KEH), Sarawak Cable announced that the transfer of shares was completed on August 28, 2023.
The company stated that the proposed disposal has become unconditional, and the remaining completion amount, minus any retention amount, should be paid by KEH no later than October 31, 2023, which is three months from the unconditional date.
PT IME owns a mini-hydro power plant in Indonesia. In the first quarter ended August 31, 2023 (1Q2023), Sarawak Cable’s group net loss worsened to RM12.7 million from RM546,000 in 1Q2022.
The decrease in revenue due to reduced production contributed to this decline.
Group turnover dropped from RM179.3 million to RM92.1 million in 1Q2023. Consequently, the company’s losses per share increased from 0.14sen to 3.48sen. In the current quarter, the cables and wires segment saw a decline in revenue, falling to RM68.8 million compared to RM169.8 million in 1Q2022. As a result, the segment incurred a loss of RM8.96 million, an increase of RM2.1 million.
This segment contributed 74.8 per cent to the group’s revenue, down from 94.7 per cent. Due to the ongoing restructuring programme, Sarawak Cable’s credit and financing lines are currently on hold. As a result, the company is operating at a lower capacity using internal resources.
This reduction in production and revenue has led to higher unabsorbed overheads and a segment loss for the reporting period.
Despite these challenges, the company stated that there is strong market demand for its cables and wires, and it has a substantial order book.
The transmission lines construction segment reported significantly higher revenue of approximately RM19.2 million, contributing 20.8 per cent to group revenue. However, the segment experienced a loss of RM771,000. The progress of all projects has also been affected by the standstill of financing lines.
Nevertheless, Sarawak Cable is making every effort to complete ongoing projects within the committed construction period.
The company plans to actively participate in works as subcontractors and strengthen its project management team to better manage costs and completion timelines. In 1Q2023, the galvanised products and steel structures segment generated revenue of RM4.08 million, resulting in a wider loss of RM721,000. This segment, like others, is operating using internal resources due to the standstill of credit and financing lines during negotiations with creditors.
The company mentioned that market demand for products under this segment has started to pick up gradually, and they are exploring opportunities to supply and sell products and services in Malaysia and Borneo Island.
The helicopter services and corporate segment reported lower revenue of RM796,000, managing to reduce its loss to RM1.8 million. Sarawak Cable commented that the cables and wires segment’s book orders remain high, and there is an encouraging increase in book orders for galvanised products and steel structures, indicating positive prospects for the future
