KUALA LUMPUR (Sept 27): Ivory Properties Group Bhd, which is based in Penang, announced on Tuesday (Sept 27) that a third subsidiary has defaulted on a loan payment, this time for a sum of RM39 million to Malayan Banking Bhd (Maybank), which was raised to part finance the purchase of land for a project.

The wholly-owned unit, Ivory Meadows Sdn Bhd (IMSB), cannot meet its payment obligation, as its cash flow was affected following the delay in the project’s launch due to the impact of the Covid-19 pandemic, according to Ivory Properties.

“The company’s support for Ivory Meadows was also affected due to limited available cash, which was used to sustain the group’s operations and defray overhead,” Ivory Properties said in a bourse filing.

It said it has yet to receive notices of demand or default from Maybank, so there is no legal implication at this stage.

The default, it said, also posed potential cross default on other banking facilities granted to the group, though there is “no actual default as of today and similarly, no cross default for now”.

“The company, together with IMSB, is seeking Maybank’s indulgence to consider the extension of time for the commencement of principal repayment and thus allow IMSB sufficient time to launch the project to generate cash flow. The extra time will also enable the company to complete its proposed capital raising exercise, wherein part of the proceeds can be used to regularise the default in payment,” it said.

It was referring to its proposed private placement to raise RM14.2 million, which has yet to be completed. It obtained a six-month extension to Oct 19 to complete the exercise.

It further said the default should have no significant impact on its business, both financially and operationally, with the inclusion of the proposed capital raising exercise that is being formulated at present.

The directors of the company also opined that the company is solvent and is able to pay all of its debt as and when they fall due within 12 months from Sept 27.

Less than two months ago, on Aug 8, the company announced that two other wholly-owned subsidiaries — Ivory Indah Sdn Bhd and Ivory Times Square Sdn Bhd — had defaulted on three financing facilities granted by CIMB Islamic Bank Bhd, Bank Islam Malaysia Bhd and Bay Commercial Services Sdn Bhd, for a total outstanding sum of RM1.89 million. As of Sept 1, the sum stood at RM1.996 million.

Ivory Properties slipped into Practice Note 17 (PN17) status on Aug 1, after its external auditors Messrs KPMG PLT flagged material uncertainties over the developer’s ability to continue as a going concern, in view of its liabilities exceeding current assets by over RM60 million.

Ivory has been loss-making since the financial year ended March 31, 2020 (FY2020), as it failed to achieve sufficient revenue to sustain its operating costs. The group’s cash and bank balances as at June 30, 2022 stood at RM1.44 million, with operating cash flow of RM260,000, compared with a negative operating cash flow of RM8.9 million as at March 31.

Meanwhile, the company has also informed via a bourse filing that KPMG has resigned as its auditors on a voluntary basis, and their term of office will end 21 days from the notice date of Sept 23.

Ivory Properties’ share price dipped half a sen or 6.67% to close at seven sen on Tuesday, valuing the group at RM34.31 million.

Read also:
Ivory Properties hurt by pandemic decisions?