Published on 12 Dec 2019.
RAM Ratings would like to highlight that KMCOB Capital Berhad (KMCOB or the Company) will not be able to meet the principal repayment of the RM55 mil tranche of the Company’s Guaranteed Serial Bonds (Guaranteed Bonds), which will mature on 13 December 2019. Despite that, Bondholders will be protected by the unconditional and irrevocable financial guarantee provided by Danajamin Nasional Berhad (rated AAA/Stable/P1 by RAM). As such, the rating of the Guaranteed Bonds remains at AAA(fg)/Stable as the guarantee enhances the credit profile of the Guaranteed Bonds beyond KMCOB’s stand-alone credit strength. KMCOB is a funding conduit of Scomi Oilfield Limited, and is ultimately owned by Scomi Energy Services Bhd (Scomi Energy).
In the last few months, KMCOB and Scomi Energy have been working on refinancing or restructuring the Guaranteed Bonds but efforts have been unsuccessful. To date, approximately RM22 mil has been accumulated in the sinking fund, translating into a shortfall of about RM33 mil on the sum required to redeem the imminently maturing tranche due on 13 December 2019.
On 10 December 2019, Scomi Energy received a revised Letter of Offer from MIDF Amanah Investment Bank Berhad for an Islamic bridging facility of up to RM35 mil (the Bridging Facility) to fund the shortfall. However, we do not expect the Bridging Facility to be drawn down in time to redeem the maturing tranche because the security arrangements and conditions precedent are unlikely to be fulfilled during this extremely small window of time.
Despite not being able to meet the principal payment, KMCOB will continue paying coupons on the Guaranteed Bonds, which will also fall due on the same date. The Company is seeking indulgence from the bondholders for an extension of time up to 28 February 2020 to make the principal repayment on the RM55 mil tranche.
Thong Mun Wai
(603) 3385 2522
(603) 3385 2577
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Ratings on KMCOB Capital Berhad