Sarawak govt, banks left holding Serba Dinamik’s can of worms

 

Sarawak government entities are said to hold a total of 30% of Serba Dinamik’s shares.

PETALING JAYA: Once the darling of investors, Serba Dinamik Holdings Bhd appears to have come to the end of the road after the High Court granted a petition by six financial institutions to wind up the company and three of its subsidiaries over debts totalling an eye-watering RM5 billion.

The collapse of this oil and gas services provider, which was flying high just a few years ago, is startling to many market observers. The contrast couldn’t be more stark – in late 2019, its share price was trading near its highest, above RM4.20. At its peak, the company was valued at RM6 billion.

When Bursa Malaysia suspended the company’s stocks last week after it failed to submit its 2022 annual report, its shares were frozen at one sen apiece, with a market cap of only RM37 million.

Over the past two years, the investing public has been left aghast at the flurry of bad news emanating from the cash-strapped company, which had also fallen into the Practice Note 17 (PN17) category of companies in financial distress.

Serba Dinamik’s sad saga

The sad saga of Serba Dinamik is enough to bring tears to those who invested in the company when it was flying high, as well as bankers from the six financial institutions who dished out close to RM5 billion in loans to the company.

The six financial institutions which succeeded in getting the winding up order are Standard Chartered Saadiq Bhd, HSBC Amanah Malaysia Bhd, AmBank Islamic Bhd, MIDF Amanah Investment Bank Bhd, United Overseas Bank (Malaysia) Bhd, and Bank Islam Malaysia Bhd. Needless to say, some heads will have to roll at these banks.

Today, Serba Dinamik’s shares can be said to be virtually worthless. One would think that ordinary retail investors are the only ones who got burnt by this corporate disaster.

Not so.  In fact, its substantial shareholders include Permodalan Nasional Bhd, Lembaga Tabung Haji, and the Sarawak government, according to the company’s latest available Integrated Report 2021.

The report reveals the Sarawak state financial secretary as the second biggest shareholder with 159.5 million shares and 36 million warrant holdings, while state-linked Bintulu Development Authority is the 12th biggest shareholder with 21 million shares and six million warrant holdings.

However, it does not reveal the prices at which the Sarawak government entities acquired the shares, so the financial hit it will take is not known at the moment.

Sarawak government’s investment under scrutiny

The Sarawak government’s poor investment has not escaped the scrutiny of DAP’s Bandar Kuching MP Dr Kelvin Yii, who urged the government to reveal the exposure and quantum of the state treasury’s possible losses.

In a statement yesterday, the DAP Youth chief claimed the total shares of the company owned by bodies linked to the Sarawak government amounted to about 30%.

He said the court’s decision to allow a petition by the six financial institutions to wind up Serba Dinamik Holdings and its three subsidiaries – Serba Dinamik International Ltd (SDIL), Serba Dinamik Sdn Bhd, and Serba Dinamik Group Bhd – was “concerning” as the Sarawak government held significant shares in the company.

Yii said he raised the issue in May 2022, but that deputy premier Douglas Uggah Embas merely told the state legislative assembly that Serba Dinamik was “only going through a series of interim or short-term setbacks”.

He also asked about the government’s plan to recoup such losses and ensure zero repeat of such scandals. “Good governance is fundamental to ensure that the future of Sarawak and Sarawakians is protected,” said Yii.

Serba Dinamik board not giving up

Meanwhile, Serba Dinamik Holdings’ board of directors has filed an appeal against the High Court’s decision to wind up the company and its three subsidiaries.

In a statement yesterday, the company said it has also filed an appeal against the High Court’s decision yesterday to reject its application to adjourn the winding-up hearing.

The group also said the board has instructed its solicitors to file an application to stay the High Court’s order to wind up the company, to ensure the continuation of the company’s business pending a decision by the Court of Appeal. - FMT