Nam Cheong's current assets 'unlikely to adequately meet' RM1.38b in liabilities

MALAYSIAN offshore support vessel builder Nam Cheong, which is trying to restructure its debts to "ride out this incredibly challenging market environment", on Friday said its board is still unable to confirm the group's ability to continue as a going concern.

In response to the Singapore Exchange's (SGX) queries, Nam Cheong noted that the group's current assets of RM266 million (S$86.2 million) in Q1 2021 are "unlikely to adequately meet" its short-term liabilities of RM1.38 billion during the quarter.

This was a result of the depressed utilisation of vessels and realisable value of the group's vessels, which are operating in the challenging oil and gas industry, it said on Friday.

The short-term liabilities mainly comprised loans and borrowings of about RM1.01 billion as well as trade and other payables of RM327 million.

Nam Cheong told SGX that the group has been holding discussions with its principal lenders and has appointed advisers to help address significant debt maturities, which may include an extension of the maturities and/or restructuring of existing loans, as announced previously.

Since November 2020, its wholly-owned subsidiary Nam Cheong Dockyard has been engaging actively with both financial creditors and trade creditors, "with more steady progress in the latter", and the group is hopeful for a positive outcome, it said on Friday.

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The group has also been reviewing its cash-flow projections and discussing with various parties regarding possible actions to contain operating costs and preserve working capital to fund its operations.

However, no definitive agreements in relation to the debt restructuring have been entered into by the group, Nam Cheong said in its response to SGX.

In the event its debt restructuring is "not favourably completed in a timely manner, the company and the group will continue to be faced with a going concern issue", Nam Cheong added.

The board voluntarily suspended trading in Nam Cheong shares in April 2020, as it was unable to reasonably assess the company's financial position and demonstrate that the company was able to continue as a going concern.