Beleaguered furniture maker Kenmark Industrial Co (M) Bhd sees no significant change in its business as its appointed adviser, Ferrier Hodgson MH Sdn Bhd, works out a plan to regularise its financial condition.
“Ferrier Hodgson is still in the midst of formulating the regularisation plan. At the current stage, the directors are of the view that the regularisation plan might not result in a significant change in the business direction or policy of the company,” it said in a statement to Bursa Malaysia
yesterday.
The PN-17 company said it had nine months to submit the plan, or by June 2011.
It added that the statement was made on the collective approval of its directors, namely Datuk Abd Gani Yusof, Ho Soo Woon, Ahmed Azhar Abdullah and Woon Wai En.
To recap, Kenmark first made headlines when its Taiwanese managing director James Hwang Ding Kuo mysteriously disappeared in late May, which caused its share price to tumble over 90% in a few days.
Most of the Taiwanese major shareholders’ shares were then pledged to financial institutions, and the majority of them were force-sold in the panic.
Hwang then broke his silence, saying he had taken ill in China. Soon after, it saw the entry of “white knight” in Datuk Ishak Ismail who bought 32.9% stake when its shares were plunging. Ishak had said he was “helping a friend out” to get the financially distressed company on its
feet.
However, Ishak then sold his entire stake just a week later — netting a gain of RM10.2 million in the process. He was subsequently served with an ex-parte injunction by the Securities Commission to disallow him to use the proceeds gained from the share sale.
Following Hwang’s disappearance, the company’s financial distress came to light. Kenmark reported a net loss of RM146.52 million in its fourth quarter ended March 31, 2010 (4QFY10), which included RM69.21 million doubtful debt provisions for 100% of its outstanding debts after 12 months.
This amounts to a significant 28% of the company’s total trade receivables of RM248.66 million as at Dec 31, 2009 — before the company plunged into crisis. This was seen as unusual as most credit terms are for 90 days, while Kenmark said it granted credit periods of 180 days.
Hwang has since pared his stake in Kenmark down to 3.51%, while Kenmark has been suspended from trading since Aug 9 for failing to submit its audited financial statements for FY10.
Prospects continue to look bleak for the company, when it was served with winding-up petitions by lender Export-Import Bank of Malaysia Bhd (Exim Bank) for the sum of RM16.31 million for non-payment of loans, along with the appointment of provisional liquidators.
It had also received letters of demand from EON Bank Bhd and RHB Bank Bhd for default of banking facilities amounting to RM7.67 million and RM2.17 million, respectively.
Kenmark had said in July that it was trying to contact its end-customers in its trading division, while the company had a limited stock of raw materials for its printing division.
“In light of the recent developments, most of our customers have switched their orders to other manufacturers. The management is now attempting to persuade these customers to place orders with the company and we expect 20% of the orders to return,” it had said.
Since then, the companies have not furnished any updates of its business operations.
This article appeared in The Edge Financial Daily, September 9, 2010.
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