ETI Tech unit fails to repay loan of RM11.7m

by **Cals** Tue 26 Mar 2013, 01:32

ETI Tech unit fails to repay loan of RM11.7m
Business & Markets 2013
Written by Madiha Fuad of theedgemalaysia.com
Monday, 25 March 2013 19:35

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KUALA LUMPUR (Mar 25): Debt-laden ETI TECH CORPORATION BHD [] announced that its wholly-owned subsidiary, ETI Tech (M) Sdn Bhd, has failed to settle debts worth RM11.7 million to Maybank Bhd.

In a filing to Bursa Malaysia, the group said that it does not have sufficient funds to make the repayments to Maybank.

“The key contributing factors leading to the default in payment was mainly due to the delay in collections and timing delay in realisation of projects over past few financial years,” it said.

According to the note, legal proceedings may be initiated by Maybank against the group.

“However, the financial impact is not substantial as there are security of assets charged to Maybank,” said the group.

With ETI Tech (M) being a major subsidiary of the group, the default may trigger a cross default with another lender, namely Hong Leong Bank Berhad.

The group added that the default will not have substantial short term impact on the business and operations of the Group.

Also, the group noted that a potential investor has issued an initial letter of authorisation to Maybank and Standard Chartered Bank Berhad on January 30, 2013.

The letter is said to be in regards to the drawdown of a Bankers’ Guarantee amounting to USD10 million and another USD5 million to Hong Leong Bank Berhad to be utilised for increase in Credit line and partial settlement of the outstanding loans.

The company, which has been given a Practice Note 1 status, has set up a "steering committee" to make immediate decision into the group’s proposed restructuring plan.

The group is said to be in advanced discussions for M/s Ernst & Young to be the company’s adviser and Interim Department for the Group’s proposed restructuring plan.

According to ETI Tech, the group’s proposed restructuring plan will complement the existing core business in renewable energy, the existing workforce, suppliers and the advisers.

The group has seen a 72% decline in share price since last year from 22 sen in February 2012 to 6 sen yesterday. Despite the gradual decrease, the share price increased 9.1% or 5 sen yesterday.