The Company wishes to announce that it has on 6 August 2020 received a notice of demand (“Demand”) dated 29 July 2020 from MBB for the sum of RM113,957,000.00 (“Demanded Sum”) together with interest accruing thereon at the rate of 3.5% per annum above MBB’s Base Lending Rate on a monthly rest and compounded monthly (estimated total interest accruing as at 6 August 2020 is approximately RM19,372,000.00) (“Interest Accrued”).

1.         BACKGROUND

• The Demanded Sum originally arose due to the default in payment to MBB by an indirect subsidiary of SGB, Scomi Rail Bhd (“SRB”) (which was wound-up on 6 May 2019 with a Receiver and Manager appointed on 9 May 2019). Please refer to the announcements dated 13 February 2019, 15 February 2019, 21 February 2019, 7 March 2019, 8 April 2019, 22 April 2019, 30 April 2019 and 15 May 2019.

           SRB is a wholly-owned subsidiary of Scomi Engineering Bhd (In Liquidation) ("SEB"), a wholly-owned entity of SGB. The assets and liabilities of SEB and its subsidiaries,

           which includes SRB, have been deconsolidated from SGB’s consolidated financial statement as at 30 June 2019.

• 57,208,320 shares (“Pledged Shares”) of Scomi Energy Services Bhd (“SESB”) owned by SGB was secured against the bank facilities granted by MBB to SRB which was defaulted by SRB.

• On 27 May 2019, a settlement was agreed between MBB and the Company for the Demanded Sum (“Settlement”) which was mainly subject to the completion of the Proposals (the Proposals as per announcement dated 27 May 2019 by MIDF Amanah Investment Bank Berhad and Astramina Advisory Sdn Bhd).

2.        CIRCUMSTANCES LEADING TO THE DEMAND FROM MBB

• On 20 March 2020, the Board of Directors of SGB (“Board”) resolved to abort the Proposals after taking into consideration, among others, the current market conditions as well as the deteriorating market price of SGB shares and to explore a fresh proposal, to comprehensively address the Company’s current PN17 status. This inadvertently resulted in the termination of the Settlement.

• Arising from this, MBB has issued a demand for the Demanded Sum and Interest Accrued.

3.        LEGAL IMPLICATIONS OF THE DEMAND

• MBB has the right to proceed with legal proceedings against SGB if the Demand is not paid or settled.

• MBB reserves the right to take steps to dispose the Pledged Shares or any part thereof at their discretion and without further notice to SGB if the Demand is not paid or settled.

4.        BUSINESS, OPERATIONAL, FINANCIAL IMPACT AND THE EXPECTED LOSS FROM THE DEMAND

• Business And Operational Impact From The Demand

          There are no business and operational impact of the Demand on SGB.

• Financial Impact And The Expected Losses From The Demand

           MBB reserves the right to take steps to dispose the Pledged Shares or any part thereof at their discretion and without further notice to SGB if the Demand is not paid or settled. 

           In the event this takes place, there would be a Financial Impact and possible Expected Losses from the Demand which cannot be quantified currently as it is dependent on the

           quantity of the Pledged Shares that is disposed by MBB and the realisable value of the Pledged Shares that is disposed.

5.        MEASURES TAKEN TO ADDRESS THE DEMAND IN PAYMENT

           SGB is presently in the process of negotiating a resolution with MBB.

This announcement is dated 6 August 2020.