KUALA LUMPUR (Aug 11): The High Court on Thursday (Aug 11) allowed Hongkong and Shanghai Banking Corp Ltd (HSBC), a foreign holder of Serba Dinamik Holdings Bhd's sukuk, to intervene in the oil and gas services outfit's scheme of arrangement.
HSBC filed the application to intervene in the creditor repayment scheme on Aug 8 through Messrs Raja Darryl & Loh.
According to court documents, HSBC, who holds Islamic debt papers issued by Serba Dinamik's subsidiaries — namely SD International Sukuk Ltd and SD International Sukuk II Ltd — that are set to mature this year and in 2025, had not been invited to participate in the scheme of arrangement.
It is learnt that the Islamic debt papers issued were for a total of US$500 million (RM2.22 billion).
Serba Dinamik has two US dollar-denominated sukuk programmes — a US$300 million one that matured on May 9 with outstanding issuances of US$222.22 million, and another US$200 million sukuk maturing on May 12, 2025 with outstanding issuances of US$180.12 million.
In the application, HSBC is seeking to be granted leave (permission) to participate in the proceedings in relation to the orders and relief sought by Serba Dinamik, as well as to commence proceedings against Serba Dinamik if necessary.
HSBC claimed that as holder of the sukuk it had not received payments for amounts due and had not been invited to participate in the scheme of arrangement.
Hence, HSBC wants its rights and interests as the sukuk holder to be protected as it is severely affected by Serba Dinamik's application for the scheme of arrangement as well as a restraining order against its creditors, and would be severely prejudiced if it is not allowed to participate in the proceedings.
Amid this development, judge Atan Mustaffa Yussof Ahmad deferred the sanction hearing to examine Serba Dinamik's application to Sept 19.
Serba Dinamik's units allowed to proceed with their schemes of arrangement
Atan Mustaffa, however, allowed the application filed by four Serba Dinamik's subsidiaries to proceed with their respective schemes of arrangement after their court convened meeting last July 25, as there were no interveners from other companies.
The four subsidiaries are Serba Dinamik Sdn Bhd (SDSB), Serba Dinamik Group Bhd (SDGB), Serba Dinamik Development Sdn Bhd (SDDSB) and SD Controls Sdn Bhd.
But despite having gained the court's sanction to proceed, sources told The Edge that questions are now being asked whether these units' creditors would be able to get their money, as the sanction hearing involving Serba Dinamik has been deferred.
Under these schemes of arrangement approved by creditors last July 25, the creditors are to get 15% of what is owed to them first, and the remaining 85% at another time. The 15% payment is learnt to be due on Friday (Aug 12) and Serba Dinamik's sanction hearing could jeopardise this arrangement, according to a source familiar with the matter.
There are altogether five schemes of arrangement that Serba Dinamik and its subsidiaries have proposed. One between Serba Dinamik and its scheme creditors, and one each between the four subsidiaries (SDSB, SDGB, SDDSB and SDCSB) and their respective creditors, which the court has allowed to proceed.
These schemes of arrangement involve only local creditors. Serba Dinamik and its subsidiaries previously told the court that they would come up with another one specifically for foreign creditors.
It was reported in June that six lenders had reached a settlement with Serba Dinamik and its subsidiaries with the schemes of arrangement and would hold their applications for a winding-up petition against Serba Dinamik and its subsidiaries, provided that the companies do not default on the payment of debts, as proposed under the schemes. This resulted in a consent order being recorded at the High Court when the application for the schemes of arrangement came up before Atan Mustaffa.
Prior to that, Bloomberg reported that SDIL had defaulted on a dollar-denominated Islamic bond with an outstanding principal of US$222.22 million after failing to make payment due in May, citing Covid-19-related cash-flow constraints. It also defaulted on a ringgit-denominated debt after missing payment on May 24.
Serba Dinamik filed its application for a court-convened meeting of its creditors last month and is in the midst of finalising a plan to address its financial concerns.
Serba Dinamik shares closed unchanged at 9.5 sen on Thursday, giving the group a market capitalisation of RM354 million.
*Note: This article has been updated to state that the scheme of arrangement between SD Controls Sdn Bhd and its creditors has also been allowed to proceed, according to Serba Dinamik's bourse filing.*