Vivienne Tay at The Business Times reports that two subsidiaries of Catalist-listed Hatten Land are looking to undergo debt restructuring, on top of the group’s other initiatives to make its property development business more resilient in light of ongoing pressures from the Covid-19 pandemic.
The subsidiaries, MDSA Resources and MDSA Ventures, are the developers for the group’s integrated mixed-use projects Hatten City Phase 1 and 2 in Malacca, Malaysia, BT says.
MDSA Resources and MDSA Ventures have applied to the High Court of Malaya for the court’s leave to call for creditors’ meetings under Section 366(1) of the Malaysian Companies Act, to consider and approve a proposed scheme of arrangement and compromise between each developer and their respective unsecured creditors, Hatten Land said on July 2, BT relays.
They are also seeking a three-month restraining order under Section 368 of the Act to restrain any legal proceedings against them and/or their assets, including any winding up or arbitration proceedings, according to BT.
The first court date for both applications is expected within 14 days from July 2, the report notes.
According to the report, Hatten Land said it is currently unable to reasonably ascertain the proposed scheme’s financial impact on the group, as the scheme is in the preliminary stages and details have not yet been formulated.
It added that the subsidiaries applied for the restraining order as part of “proactive measures” to manage the group’s financial condition to achieve “a more sustainable capital structure in line with the current business climate”.
BT relates that Hatten Land said the “strategic” restructuring is meant to strengthen the balance sheets of MDSA Resources and MDSA Ventures and restructure legacy contractual obligations.
In response to the challenging business environment, Hatten Land has also adjusted salaries and reduced non-essential expenses to “balance near-term priorities to generate immediate savings and conserve financial resources”, among other initiatives, BT relays.
Precautionary and containment measures for the novel coronavirus within Malacca have affected consumer expenditure and purchases of big-ticket items such as properties, the company said on July 1.
As the group’s property portfolio is located primarily in Malacca, the business impact has been particularly distinct, the report states.
About Hatten Land
Hatten Land Limited operates as a property developer. The Company develops malls, hotels, and residential properties. Hatten Land serves customers in Singapore and Malaysia.
As reported in the Troubled Company Reporter-Asia Pacific on Nov. 12, 2019, The Business Times said Hatten Land’s independent auditor, Ernst & Young, has made a disclaimer of opinion on Hatten’s financial statements for the year ended June 30, 2019. While Hatten’s directors have prepared the financial statements on a going concern basis based on the assumptions disclosed in the financial statements, Ernst & Young highlighted conditions that have given rise to material uncertainties on the group’s ability to continue as a going concern. Among other things, Ernst & Young noted in its report dated Nov. 8, 2019, that as at end-June 2019, the group’s total loans and borrowings amounted to MYR416.52 million, of which MYR328.83 million was classified as current liabilities and exceeded the group’s cash and bank balances of MYR28.48 million, BT related.