Withdrawal of CIMB support for a debt restructuring exercise remains a big question mark

PETALING JAYA: It remains unclear why CIMB Bank Bhd withdrew its support for a debt restructuring exercise involving the beleaguered Asia Petroleum Hub Sdn Bhd (APH) and its multi-million debt problem but the implications on Muhibbah Engineering Bhd remain bleak.
CIMB has pulled out from a debt restructuring for APH, delaying the latter's payment for construction works done by Muhibbah.
CIMB
Research downgdraded Muhibbah following the negative news, conceding
that it had been too optimistic on the APH talks and was disappointed
that no solution has been achieved.
“A resolution could be
protracted, raising the possibility of Muhibbah taking about RM400mil
hit in its 2012 financial year,” it said.
The research house said it had expected the restructuring scheme to be concluded in the second half of this year.
“We
gather that the main reason for the change of course is the unresolved
land lease agreement for the 99-acre site for the APH project.
“As
the transfer of land ownership from the Federal Government to APH is
still unresolved, bankers are unable to use the land as collateral,
which means that APH cannot get refinancing and new funds,” it said.
Kenanga
Research, however, believes Muhibbah is “still a going-concern' company
as it will still be supported by its unbilled ongoing projects worth
about RM2.2bil and will last up to three years”.
It noted that
at present, Muhibbah's balance sheet is considered healthy with a net
gearing position of 0.25 times, enough to support its ongoing business.
CIMB
Bank declined to comment for this article. Muhibbah shares took a
beating yesterday, retreating by 18 sen or 15% to RM1.02 on heavy
volume of 31.2 million shares.
Muhibbah filed a follow-up
announcement on Bursa Malaysia yesterday, stating that “as at Dec 31
last year, the company's entitled receivables in respect of
construction works done for APH which have been duly certified by APH
is RM399.5mil and the amount of claims pending certification is an
additional RM7.5mil”.
In a bid to develop Malaysia as a leading
petroleum hub, the Government has issued a development order and
approval for site possession and commencement of work to APH in 2006 to
develop a petroleum hub and bunkering facility on a 100-acre reclaimed
island, with the pending land lease details to be finalised between the
Government and APH.
“Substantial financing has since been
released by the financier, CIMB Bank and significant construction works
have been carried out by contractors including Muhibbah. However, the
land lease issue remains unresolved as at to date,” it said. It has
been reported that APH owes the bank RM840mil.
Muhibbah said it
had a direct corporate guarantee from APH and was currently evaluating
all possible courses of action to recover the receivables.