Scomi Energy Unit Defaults on RM 55 million Worth of Bonds

Banner-Article.png
Scomi Energy Services Bhd (SESB) unit, KMCOB Capital Bhd (the issuer), has defaulted on paying back the principal of RM 55 million Series E bonds due on 14 December 2019. The bond issued under the RM 320 million Guaranteed Serial Bond facility is guaranteed by Danajamin Nasional Berhad via the financial guarantee insurance facility. As of 30 November 2019, the outstanding amount under the bond facility was RM 105 million.

SESB is a service provider to the oil and gas, and coal industries which the services include drilling and completion services, offshore support and marine logistics services. Its unit, KMCOB Capital Bhd, was established to manage the issuance of private debt securities, the proceeds from the issuance, and the refinancing exercise of the private debt securities.

KMCOB Capital Bhd has approximately RM 22 million in the sinking fund and short of RM 33 million to repay the Series E bonds. Despite default on the redemption, KMCOB Capital Bhd will still be paying the coupon of the Series E bond to the bondholders, which is also due on the same date as redemption.
Scomi Energy Services Bhd and its unit, KMCOB Capital Bhd, had taken several measures to address the default.

KMCOB Capital Bhd had submitted a formal request to the bond trustee, TMF Trustees Malaysia Berhad, to seek a remedial period from the bondholders.

On 10 December 2019, Scomi Energy had accepted an offer by MIDF Amanah Investment Bank Bhd to provide bridging financing for the repayment of the RM 55 million Series E bonds. Unfortunately, the drawdown from the bridging financing could not be done before the redemption date due to insufficient time to fulfill the conditions precedent and security arrangement.
At this point, no legal action has been taken by the trustee of the bondholders, TMF Trustee Malaysia Bhd or Danajamin Nasional Bhd, as SESB is expediting the process to fulfill the requirements for the drawdown from the bridging financing within the remedial period.

Read What Happens When Your Bond or Sukuk has Defaulted?

Sources: The Edge Markets, The Star
 
Disclaimer
This report has been prepared and issued by Bond and Sukuk Information Platform Sdn Bhd (“the Company”). The information provided in this report is of a general nature and has been prepared for information purposes only. It is not intended to constitute research or as advice for any investor. The information in this report is not and should not be construed or considered as an offer, recommendation or solicitation for investments. Investors are advised to make their own independent evaluation of the information contained in this report, consider their own individual investment objectives, financial situation and particular needs and should seek appropriate personalised financial advice from a qualified professional to suit individual circumstances and risk profile.
 
The information contained in this report is prepared from data believed to be correct and reliable at the time of issuance of this report. While every effort is made to ensure the information is up-to-date and correct, the Company does not make any guarantee, representation or warranty, express or implied, as to the adequacy, accuracy, completeness, reliability or fairness of any such information contained in this report and accordingly, neither the Company nor any of its affiliates nor its related persons shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
 
Stay on top of what’s happening in bond and sukuk markets.
Enter security code:
 Security code
 

Sign up to receive update on BIX Malaysia articles and tutorials or you can Read Our Last Edition »