THHE eyes PN17 exit early next year

KUALA LUMPUR: TH Heavy Engineering Bhd (THHE) expects to exit its PN17 status by early next year and to return to the black this year with its offshore patrol vessels (OPV) contract.
The group’s 49% associate company THHE Destini Sdn Bhd (TDSB), a joint venture with Destini Bhd, was awarded the job on Jan 18, 2017 to construct three units of OPVs for the Malaysian Maritime Enforcement Agency (MMEA). Under the OPV contract, TDSB is to undertake the supply, delivery, testing and commissioning of the three OPVs complete with fittings and accessories for a contract value of RM738.9 million, representing its current order book.
Group CEO Suhaimi Badrul Jamil said it is in the process of building the first vessel and the second vessel is also going to be built concurrently. It is also tendering for RM10-RM20 million worth of offshore and marine crane manufacturing jobs.
“We’ve to impair certain things, looking at our audited account. We’ve to prepare lots of things. There’s a fair bit of kitchen-sinking that needs to be done and we need to clean up our balance sheet. After that, we’re confident of getting into black,” he told reporters after its AGM today.
While it is inching closer to completing its regularisation plan, he said the company has to boost its order book in the meantime.
“We’re tendering and applying for jobs from various agencies such as MMEA, agencies that require offshore vessels, marine police, navy, customs. We’ve diversified our earning base doing OPV shipbuilding. We’re looking for similiar projects, maintenance, repair & overhaul (MRO) works and looking for certain opportunities overseas.”
THHE has secured the necessary licences from the Ministry of Finance to provide shipbuilding and MRO services for government vessels.
With the completion of the novation contract for the Layang floating production storage and offloading facility on June 1, the proceeds will be used to repay its creditors.
“We hope to complete the scheme of arrangement and by the time the audited account is completed, we can get out of PN17,” said Suhaimi, adding that to get out of PN17, it needs two consecutive quarters of profit.
THHE fell into PN17 status on April 28, 2017 after auditors expressed a disclaimer of opinion on the going concern assumption in the company’s audited financial statements for the financial year ended Dec 31, 2016 (FY16).
Director Too Kok Leng said given that it is in a PN17 status, there are issues with the authorities.
“No banks want to touch you now. The main aim is to get out of where we are. Once we are out of it (PN17), it’s a different picture. Things will become easier.”
He said it is business as usual for THHE with the new government taking over office, emphasising its focus on MRO work given that the government is also cutting down on expenditure.
In FY17, THHE saw a net loss of RM99.53 million against a revenue of RM5.4 million. In the first quarter of FY18, THHE reported a net loss of RM14.75 million on the back of RM186,000 in revenue.