High-5 still in deep financial trouble

by **Cals** Thu 08 May 2014, 19:11

Business & Markets 2014

Written by Yen Ne Foo of theedgemalaysia.com

Thursday, 08 May 2014 10:14

KUALA LUMPUR: Cash-strapped breadmaker, High-5 Conglomorate Bhd (High-5), had its financial troubles compounded when a bank threatened to repossess its production equipment for its failure to settle instalment and interest arrears totalling RM5.58 million.

High-5 said in a filing with Bursa Malaysia yesterday that RHB Bank Bhd had served a notice to repossess a “new semi auto equipment line” if the company failed to pay the RM5.85 million due by next Tuesday.

The amount is owed by High-5’s subsidiary, Standard Confectionary Sdn Bhd (SCSB), in a hire purchase facility.

High-5 said the notice would not have immediate or material impact on its financial and operational matters as it has a restraining order from the High Court, preventing any action against High-5 or SCSB’s assets.

The restraining order, however, will expire in July 2014. Creditors are expected to pounce on the confectionery maker once the court order expires.

As at the end of the first quarter of 2014 (1Q14), High-5 had cash and bank balances of only RM4.82 million and a bank overdraft of RM90.34 million.

Despite the injection of funds from new investors, Covenant Equity Consulting Sdn Bhd and Suncsi Holdings Sdn Bhd, High 5 recorded a loss of RM12.97 million in 1Q14, slightly higher than the RM10.69 million in the same period in 2013.

To recap, the two new investors injected RM16 million into High-5 in July last year and a second round of funding amounting to some RM22 million is also in the pipeline.

Already classified as a PN17 company, High-5 and its subsidiary’s inability to repay instalments for bank facilities highlights the depth of the company’s financial difficulties and the uphill task its new management is facing to rescue the confectionery maker.

This article first appeared in The Edge Financial Daily, on May 8, 2014.