THHE clarifies auditor’s disclaimer of opinion

KUALA LUMPUR: TH Heavy Engineering Bhd ( THHE) yesterday clarified media reports purportedly claiming that its auditor, Messrs Deloitte PLT’s disclaimer of opinion on its audited financial statements for the year ended Dec 31 2017 (FY17) had questioned the ability of the company to continue as a going concern.

THHE chief executive officer Suhaimi Badrul Jamil said: “It was true that the accounts were prepared based on the assumption that the group would be able to realise its assets and meet its liabilities as a going concern.

“However, it must be reiterated that two key components of THHE’s proposed regularisation plan, which are the Schemes of Arrangement ( SoA) and Proposed JX Nippon Contract Novation (proposed novation) to Yinson Energy Sdn Bhd (YESB), are expected to be implemented in the near future,” he said.

THHEanditsthreesubsidiaries, namely THHE Fabricators Sdn Bhd (THFSB), THHE Offshore Services Sdn Bhd and O& G Works Sdn.Bhd (OGW) during the year had each formulated an SoA with their respective scheme creditors, he said in a statement.

THHE slipped into a Practice Note 17 (PN17) status on April 28, 2017, and is currently formulating a proposed regularisation plan to exit the category.

On Dec 31, 2017, Deloitte stated that they were “unable to ascertain the ability of the group to achieve sustainable and viable operations to generate adequate cash flows from their operating activities and the timely and successful formulation and implementation of the entire proposed regularisation plan.

Earlier on Dec 15, 2017, THHE had secured an overwhelming support from its scheme creditors under the scheme at its Court Convened Creditors Meetings (CCMs) with 94.5 per cent of the unsecured creditors backing it.

The respective scheme creditors of THFSB and OGW had approved their respective scheme at CCMs held on Dec 14, 2017, it said, adding the schemes were subsequently approved by the High Court of Malaya on Feb 6, 2018.

“With the requisite lodgement of the relevant court order with the Companies Commission of Malaysia, the schemes for the company, THFSB and OGW are now effective by virtue of Section 366( 5) of the Companies Act 2016,” it added.

On Feb 15 this year, THHE’s shareholders had also approved the proposed novation, which is an integral part of the regularisation plan, at the company’s extraordinary general meeting.

Proceeds from the proposed novation would be utilised mainly to repay the scheme creditors in accordance with the terms of the respective schemes, THHE said.

Suhaimi said on April 30 this year, THHE had entered into a conditional novation agreement with JX Nippon and YESB for the proposed novation and consideration agreement with YESB.

“The company is now in the final stages of completing the proposed novation.

“Upon completion of the SoA, proposed novation as well as other components of the proposed regularisation plan, our gearing level will be significantly reduced and we hope to address all the major audit qualifications issues,” he added. — Bernama