PETALING JAYA: The clock is ticking for oil and gas services firm Daya Materials Bhd to finalise its debt restructuring exercise, said PublicInvest Research.
Notably, Daya Materials had announced that it is currently facing two new legal cases with regard to defaults on loan repayment obligations.
“Considering its current financial plight, this comes as no great surprise.
“Finalisation of its regularisation plan bears greater importance, now more than ever, given its RM246.12mil in borrowings as at Sept 30, 2018 which may or may not bring up further cases of such nature,” it said in a report yesterday.
Daya Materials had recently applied for a 6-month extension (till August) to submit its regularisation plan.
Last month, Daya Materials announced its proposed regularisation plan that will see the entrance of a new major shareholder or white knight, who will hold some 20% of the company, should its debt restructuring plan go through.
The debt restructuring exercise would involve a proposed capital reduction exercise and a proposed rights issue of new shares with free detachable warrants, among others.
This is incidentally a precursor to the group’s PN17 regularisation plan. The new major shareholder is Perfect Propel Sdn Bhd, (PPSB) which will be issued new Daya Material shares at 2.5 sen, and subsequently also participate in the company’s rights issue exercise.
PublicInvest said it is cautiously optimistic over the turnaround efforts, but increasingly wary of impediments posing difficulties for the Daya Materials to secure new contracts.
“Pending further clarity, our valuation remains under review with ‘neutral’ call retained. Earnings estimates continue to have significant downside biases,” it said.
On the legal case, the first case involves 58.5%-owned subsidiary Daya Proffscorp Sdn Bhd which has defaulted on its hire purchase payments to Maybank.
The second case involves wholly-owned Daya Maritime Limited and a US$12.7mil Islamic financing facility taken from EXIM Bank as part of its venture into the offshore subsea business, but which it has since exited to much financial “carnage”.
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