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Hatten Land subsidiaries plan debt restructuring
TWO subsidiaries of Catalist-listed Hatten Land are looking to undergo debt restructuring, on top of the group's other initiatives to make its property development business more resilient in light of ongoing pressures from the Covid-19 pandemic.
The subsidiaries, MDSA Resources and MDSA Ventures, are the developers for the group's integrated mixed-use projects Hatten City Phase 1 and 2 in Malacca, Malaysia.
MDSA Resources and MDSA Ventures have applied to the High Court of Malaya for the court's leave to call for creditors' meetings under Section 366(1) of the Malaysian Companies Act, to consider and approve a proposed scheme of arrangement and compromise between each developer and their respective unsecured creditors, Hatten Land said on Thursday.
They are also seeking a three-month restraining order under Section 368 of the Act to restrain any legal proceedings against them and/or their assets, including any winding up or arbitration proceedings.
The first court date for both applications is expected within 14 days from Thursday.
Hatten Land said it is currently unable to reasonably ascertain the proposed scheme's financial impact on the group, as the scheme is in the preliminary stages and details have not yet been formulated.
It added that the subsidiaries applied for the restraining order as part of "proactive measures" to manage the group's financial condition to achieve "a more sustainable capital structure in line with the current business climate".
Hatten Land said the "strategic" restructuring is meant to strengthen the balance sheets of MDSA Resources and MDSA Ventures and restructure legacy contractual obligations.
In response to the challenging business environment, Hatten Land has also adjusted salaries and reduced non-essential expenses to "balance near-term priorities to generate immediate savings and conserve financial resources", among other initiatives.
Precautionary and containment measures for the novel coronavirus within Malacca have affected consumer expenditure and purchases of big-ticket items such as properties, the company said on Thursday.
As the group's property portfolio is located primarily in Malacca, the business impact has been particularly distinct.
MDSA Resources is developing Hatten City Phase 1, a mixed development integrating Elements Mall, Silverscape, Hatten Place and a hotel managed by Hilton Worldwide as part of its DoubleTree brand. Hatten City Phase 1 has a land size of about six acres and an estimated gross development value (GDV) of RM2.3 billion (S$747.7 million).
Meanwhile, MDSA Ventures is developing the Hatten City Phase 2 project, which sits on a land size of about four acres and has an estimated GDV of RM1.6 billion. Hatten City Phase 2 is a mixed development comprising Imperio Mall and Imperio Residences, which will be connected to the rest of Hatten City via a link bridge.
Colin Tan, Hatten Land executive chairman and managing director, said: "While we are confident of Malacca's long-term prospects as a destination for historical, medical and wellness tourism, the Covid-19 pandemic has affected the dynamics of our business model."
Hence, Hatten Land is announcing strategic initiatives and restructuring to "reset" its cost structure and fortify its business resiliency with measured and purposeful steps, he said.
Hatten Land shares ended at seven Singapore cents on Wednesday, down 0.2 cent or 2.8 per cent.