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SGX queries Nam Cheong about its ability to operate as going concern

NAM Cheong will have sufficient working capital and financial resources to meet any obligations for at least the 12 months from Dec 31, 2019, said its board on Wednesday.

Thus the use of the going concern assumption is appropriate for the offshore support vessel builder's financial statement preparation for the year ended on the same date, the response to the Singapore Exchange's (SGX) query noted. 

There are also sufficient cash inflows generated by the group's chartering segment, with Nam Cheong anticipating its chartering segment to generate sufficient operating cash informs. This was based on its latest projections on reasonable expectations of daily charter rates, vessel utilisation and low default rates by its customers, the board said. 

Moreover, there are sufficient proceeds from the sale of certain completed vessels held for the repayment of certain borrowings due by Dec 31, 2020.

Nam Cheong has also yet to have any material claims from creditors - particularly subcontracted shipyards whose contracts have yet to be terminated or have the debts owed restructured.

These contracts and debts are likely to have a material effect on the group's financial condition and operations if brought against Nam Cheong, the board said.

In addition, offshore activities continue to keep steady in Malaysia and Nam Cheong's vessels continue to be in demand.

Due to the group's ability to continue as a going concern, the board believes trading in the company's shares should not be suspended as per listing rules. It has also confirmed sufficient disclosures were made for the continued trading of Nam Cheong's shares in an orderly manner.

On the virus situation, the board said Nam Cheong is not able to ascertain the magnitude of the possible Covid-19 impact to the offshore and marine industry and the recent plunge in oil prices. The group will continually assess as the situation develops.

Nam Cheong shares ended at 0.7 Singapore cent on Tuesday, up 0.1 cent or 16.7 per cent.