MD says Muhibbah to cope despite APH setback (5703)

SHAH ALAM: Muhibbah Engineering (M) Bhd will be able to cope financially despite CIMB Bank Bhd’s withdrawal from Asia Petroleum Hub Sdn Bhd’s (APH) restructuring exercise which resulted in a repayment delay from APH for services rendered.
Managing director Mac Ngan Boon said the group had been hopeful for the restructuring to come through but it was “strong enough to handle” APH’s RM400mil debt.
“We
will not become a Practice Note 17 company. Yes, there will be a
balance sheet impairment on us but we believe that we will go forward,”
he told a press conference after its AGM yesterday.
Mac said that the promising order book of RM3.1bil would support Muhibbah’s financials for the next two years.
The
group told Bursa Malaysia on Wednesday that “after having taken into
account the provisions and adjustments that have already been made in
the audited accounts in the previous years, the remaining net
additional full impact on the group’s shareholders’ funds, if any, is
estimated at RM245mil”.
Muhibbah has filed a suit to recover the debt albeit it also has a direct corporate guarantee from APH.
Whether
Muhibbah would be keen on a white knight coming into the picture if
receiver and manager PricewaterhouseCoopers opened the project for
tendering, Mac said that “there have always been potential investor
interest in the project and we are always open to options”.
On recovering APH’s payment, Mac said that Muhibbah was hopeful but it has yet to decide on its next step.
“It’s
too new, too fast. We think at this juncture we would like to study the
whole situation first,” he said, adding “We will take whatever steps
necessary for the company to recover (the receivables).”
CIMB Research
earlier said that the potential RM400mil accounting loss to Muhibbah’s
profit and loss statement (P&L) for the financial year 2012 (FY12)
would reverse its net profit forecast from RM65.2mil to a net loss of
RM335mil.
“However, the management clarified that the impact on
earnings was likely to be smaller, though still an accounting loss,
after taking into account adjustments for certified progress billings
and Malaysian Accounting Standards Board’s Financial Reporting Standard
139.
It added: “Assuming a RM200mil hit to the P&L, the potential accounting net loss in FY12 is RM135mil”.
Mac said that the company was surprised that CIMB took such a stand but could understand the reason behind the move.
“We
think the main reason, as have been reported, is the issue of the land
lease which has affected the value of the asset so the bank feels that
the valuation of the asset is technically impaired, leading to them
withdrawing support for the restructuring scheme,” he said.
Previously, it was said that APH’s debt with Muhibbah and CIMB could be solved through a debt-to-equity swap.
To this, Mac said that the arrangement would have been positive for Muhibbah.
Muhibbah
was awarded a RM820mil contract for marine piling and jetty works of
APH’s oil storage and bunkering facility on a reclaimed island off
Tanjung Bin, Johor.
APH had suspended payment to Muhibbah in April 2009 and now owed CIMB some RM840mil from a RM1.4bil three-year bridging loan.