“THE skipper goes down with the ship” is a maritime tradition which hints that captain of the vessel shoulders the ultimate responsibility for both their ship and everyone on board the ship (sailors and passengers alike).
This age old adage comes to mind following Fitch Ratings latest key assumptions after having further downgraded Serba Dinamik Holdings Bhd’s long-term issuer default rating to “RD” (restricted default) from “C”.
According to the rating agency, its recovery analysis assumes that global integrated oil & gas (O&G) service provider would be reorganised as a going-concern in bankruptcy rather than liquidated.
“We have assumed a 10% administrative claim,” Fitch Ratings pointed out in rating action commentary.
On its rating downgrade, the rating agency said its action follows the expiry of the 30-day grace period after the non-payment of the coupon on the group’s US$222 mil senior unsecured sukuk (Islamic bond) due in 2022.
For the record, Serba Dinamik did not pay its semi-annual coupon payment due on Nov 9 for its US dollar sukuk maturing in May 2022 during the 30-day grace period.
“Potential cross-acceleration clauses in its other debt may be triggered by the non-payment of the 2022 notes,” opined the rating agency. “The ‘RD’ rating indicates an issuer that in Fitch’s opinion has experienced an uncured payment default but has not entered into bankruptcy filings and has not ceased operating.”
At the same time, Fitch Rating has affirmed the ratings on the May 2022 sukuk issued by SD International Sukuk Ltd and the sukuk due March 2025 issued by SD International Sukuk II Ltd at “C” with the recovery rating remaining at “RR4”.
The above adage is by no means insinuating that “all is lost” for Serba Dinamik but rather a challenge for its founder, group managing director and CEO Datuk Dr Mohd Abdul Karim Abdullah to secure a “life boat” soonest to keep all “the crew (employees) and passengers (investors)” afloat.
Obviously, securing the much needed “life boat” can be a mountain to climb for Serba Dinamik at this juncture given the slim likelihood of banks or financial institutions who are willing to lend a helping hand is “very slim” to say the least.
Already mired in trading suspension and a series of legal actions involving its former external auditor KPMG PLT, its special independent reviewer Ernst & Young Consulting Sdn Bhd and market regulator Bursa Malaysia Securities Bhd, Serba Dinamik’s woes climaxed with a net loss of RM42.11 mil for its 1Q FY6/2022 ended Sept 30, 2021 – the company’s first quarterly loss since its listing in early 2018.
In an unrelated development, it is worthwhile noting that Abdul Karim has resignation has vacated his position as the non-independent non-executive chairman of KPower Bhd with effect from Monday (Dec 13).
Having transformed KPower from a loss-making manufacturing business into a renowned and indomitable player in the renewable energy industry, it is hoped that Abdul Karim can now focus on restoring the financial health of Serba Dinamik which he co-founded in 1993.
Serba Dinamik was last transacted at 35 sen at the close of the mid-day trading on Oct 22 prior to the trading suspension of its shares/warrants, hence giving the company a market capitalisation of RM1.
