Friday, Jun 28, 2019
MARC has maintained its CIS rating on Talam Transform Berhad’s (Talam) outstanding RM45.6 million Settlement Bithaman Ajil Islamic Debt Securities (Settlement BaIDs) as at June 27, 2019.
The rating action considered the extension of the maturity date of the Settlement BaIDs by 18 months to December 28, 2020 from June 28, 2019. The distressed restructuring exercise was undertaken as Talam would not have been able to meet the final repayment of RM45.6 million under the Settlement BaIDs by the due date. The exercise was approved by the Settlement BaIDs’ holders on March 22, 2019 with the profit rate maintained at 9%, payable semi-annually, throughout the extension period.
Notwithstanding the extension, Talam is expected to face weak business and financial prospects, remaining largely reliant on proceeds from land sales to meet its financial obligations. While the group has estimated the value of the unencumbered portion of its land bank of 932.7 acres at about RM665.8 million as at end-February 2019, the prevailing weak property market sentiment is likely to weigh on the group’s ability to conclude land sales on a timely basis. In addition, the less prime locations of its remaining land bank would be a limiting factor.
For financial year ended January 31, 2019 (FY2019), the group recorded revenue of RM71.9 million and losses before tax of RM27.5 million (FY2018: RM58.8 million; negative RM23.8 million). The revenue increase was due to higher revenue from the construction segment of RM34.0 million, offsetting lower land sales of RM21.2 million. Cash flow from operations stood higher at RM75.8 million, of which RM46.0 million was applied to repay borrowings which have declined to RM72.8 million as at end-FY2019 (FY2018: RM109.8 million). The group’s trade and other payables, however, continued to remain high, standing at RM400.0 million as at end-FY2019. Its liquidity, as reflected by cash and bank balance, remained weak at RM10.6 million in relation to its sizeable financial obligations. The group has undertaken a private placement of 75 million shares on May 23, 2019 which has raised RM3 million to date.
The outstanding balance under the Settlement BaIDs is partially secured against property units in Taman Puncak Jalil, Bukit Jalil, with an aggregate value of RM9.8 million as at end-February 2019, providing a low security coverage of 0.21x.
Contacts:
Wan Abdul Muiz Wan Abdul Ghafar, +603-2717 2939/ muiz@marc.com.my;
Lim Hui Boon, +603-2717 2959/ huiboon@marc.com.my