Court orders Sumatec’s associate firm to be wound up

One of the coastal oil tankers that Sumatec Resources Bhd has proposed to buy.

KUALA LUMPUR: Sumatec Resources Bhd’s associate company Semado Maritime Sdn Bhd, for which Sumatec had acted as a corporate guarantor, has been ordered by the High Court to be wound up.

The company, which manages and oversees the production operations of an oil and gas field in Kazakhstan, told Bursa Malaysia that the order for the winding up of Semado, a subsidiary of shipping firm Semua International Sdn Bhd in which the company has 49% stake, was given on April 13.

Sumatec said it did not control the associate company and its subsidiaries. “The winding up order was only found out by the company’s own initiatives on May 15, 2017,” it said.

Sumatec had issued a corporate guarantee to Bank Pembangunan Malaysia Bhd for the term loans taken by Semado previously. The term loans were also secured by the assets of Semado.

“Further, the company, being prudent, had made provision (of RM44.19mil) in the FYE2016 financial statements,” it said.

(Semua Shipping has also defaulted on a term loan given by Malayan Banking Bhd, for which Sumatec had issued a guarantee. For this, Sumatec made a provision of RM27.22mil.)

Sumatec said it had not receive any notice of legal proceedings in relation to the corporate guarantee related to Bank Pembangunan.

To recap, Bank Pembangunan and Semado had in June last year agreed on a total sum of RM73.8mil as the full and final settlement of the loan.

Under the corporate guarantee, Sumatec could be liable for the shortfall between the outstanding loan amount and the net realisable value of oil tankers Semua Mutiara and Semua Muhibbah, for which Bank Pembangunan’s lawyers had last year issued a warrant of arrest.

In an earlier (Oct 28, 2016) announcement, Sumatec said in return for the release of the vessels, the bank was claiming settlement of principal sum of RM143.32mil (plus RM100,000 in cost), or an alternative security in the sum of RM165.21mil by way of either a first class bank guarantee or a letter of undertaking from a P&I club (mutual insurance association that provides marine insurance through risk pooling) within seven days (the date had by then lapsed).

In that announcement, Sumatec said it estimated its liability as Semado’s corporate guarantor to be less than 5% of its net assets.

A desktop valuation carried out by an independent ship valuer estimated the market value of each vessel at US$7mil (RM30.25mil).

“Based on the final settlement sum of RM73.8mil and the desktop valuation which is subject to a final full inspection, the shortfall is expected to be less than 5% of the company’s net assets as at June 30, 2016,” it added.

Sumatec pointed out that as at June 30, 2016, it had net current assets of RM140mil. (Based on the 5% figure, the shortfall expected by Sumatec would be less than RM7mil.)

Sumatec said the default in payment on Oct 18 and 19 last year was due to the delay in completing the sale of the vessels that were “arrested.”