Yongnam in talks to secure refinancing or investment as repayment dates loom

WITH S$90.7 million in borrowings due within the next year, Yongnam Holdings has commenced negotiations with a potential financier and a potential investor to keep the company afloat, said its chief executive Seow Soon Yong.

On Wednesday (Nov 23), Seow said Yongnam has been exploring these options to “ensure that the company (has) sufficient funds to service its borrowings and is able to continue as a going concern”. He added that the talks and their underlying transactions are mutually exclusive, and Yongnam intends to only secure either refinancing for its borrowings or an investor.

The mainboard-listed steel fabricator on Nov 11 reported a net loss of S$18.2 million for its third quarter ended Sep 30, up 73 per cent year on year. It also reported that its current borrowings had more than doubled to S$90.7 million from S$37.2 million previously.

Current borrowings refer to debts due within the next 12 months.

Responding to queries from the Singapore Exchange, Seow attributed the increase to term loans of S$61.2 million due within the coming year. He said refinancing would help Yongnam service these borrowings and keep it viable. On the other hand, securing an investor could involve negotiations with lenders and creditors on loan and debt terms, to ensure the company can meet its payment obligations.

Yongnam earlier said in its financial statement for the period ended Sep 30 that it would consider monetising its steel beams and columns if faced with short-term cash flow gaps. The company noted that doing so could affect its business if it is awarded any new projects involving these assets.

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Shares of Yongnam closed flat at S$0.026 on Tuesday before it requested a trading halt the following morning.

After posting its Wednesday letter to shareholders, Yongnam requested for a voluntary suspension of trading of its shares on Thursday morning. The company explained that this was to avoid irregular share price movements, and to “avoid market confusion” as it proceeds with negotiations.