Malaysia’s Serba Dinamik Holdings Bhd. said its unit defaulted on a dollar-denominated Islamic bond after failing to make payment due last month, citing Covid-related cash-flow constraints.

Serba Dinamik International Ltd. defaulted on a sukuk with an outstanding principal of $222.22 million that matured May 9, the firm said in a stock exchange filing, in which it referred to missed interest payment. It also defaulted on ringgit-denominated debt after missing payment on May 24, again citing the impact of Covid-19 on operating conditions. 

The oil and gas services firm said it filed an application last month for a court-convened meeting of its creditors and is finalizing a plan to address its financial concerns. The company’s 2022 note was indicated at 5.2 cents on the dollar Wednesday, after dropping 89% last year, according to data compiled by Bloomberg.

The development adds to ongoing woes for Serba Dinamik. Its troubles began in May 2021 when former auditor KPMG questioned its accounts, triggering the accounting firm’s resignation after Serba Dinamik filed a suit against it. In December S&P Global Ratings labeled it a defaulter on missed coupon payments.

Its shares dropped 71% in May, resuming trading following a suspension by Bursa Malaysia. The firm appointed Ernst & Young as an independent reviewer but has not released any results.

The Securities Commission of Malaysia has charged the company, its director and officers for submitting a false statement in relation to the reported revenue figure of 6 billion ringgit ($1.4 billion) for the quarter ended Dec. 31, 2020.

Serba Dinamik’s board is aiming to return all the money owed to creditors under the debt restructuring plan. It has another dollar denominated sukuk due in March 2025 with outstanding amount of $180 million, according to data compiled by Bloomberg. That note was indicated at 4.6 cents on the dollar Wednesday.

Source:
courtesy of BLOOMBERG

by Harry Suhartono

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