PERNAS International Holdings Bhd expects to turn around next year, once it has restructured its RM2.5bil debts to more manageable levels, acting chief executive officer Mohd Redza Shah Abdul Wahid said.
The group was well on track to reducing its heavy debts and was targeting to pare the amount to RM1bil by the end of this year, he said.
We expect further debt reductions via disposals of other non-core assets as well as the injection of new businesses which will generate cash flow,'' he said after Pernas' AGM in Kuala Lumpur yesterday.
Pernas, which is run by a new management since five months ago, has undertook a restructuring exercise in the middle of this month to streamline its operations and improve gearing.
The exercise involves reducing bank borrowings by 20%, placing all 10 Pernas hotels under a subsidiary, Arena Target Sdn Bhd, and switching the status of Khazanah Nasional Bhd from a creditor to shareholder of Arena.
We believe Pernas will go well into next year to further reduce its debts, Redza said, adding that the focus would be on its core businesses - hotels, property, manufacturing and plantations - to help revitalise the group.
Quite likely the group plans to be less dependant on the contribution of hotels to our future income base, he added.
According to Redza, putting all 10 of its hotels under Arena would allow the group's hotel division to be more self- sufficient, thus giving it the platform to expand into other core businesses.
He said, however, that this did not mean the group would not rely on hotel profits at all.
Chairman Datuk Seri Megat Najmuddin Megat Khas said that 2002 was a difficult year for Pernas.
For the financial year ended Dec 31, 2002, the group's pre-tax loss widened to RM153.4mil from RM24.7mil previously.
On its hotel operations, divisional director (hospitality) Zain Puteh said Pernas' resorts were more severely affected by the Severe Acute Respiratory Syndrome outbreak in March this year than its city hotels.
He said its resorts experienced about 50% drop in occupancy while the city hotels were down 25% to 30%.
With the outbreak now being contained, the group's city hotels were now fast recovering as businessmen still have to come back and do their business, Zain said, adding that he expected the city hotels to fully recover by August and the resorts by early December.
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