PETALING JAYA: Magna Prima Bhd has defaulted on a term loan principal and accruing interest totalling RM37.79 million as at June 17, due to Alliance Bank.
In its Bursa filing, the group said the default arose after it failed to pay installments on the principal and interest due since March 2020.
“This is largely due to a delay in project implementation for the parcel of land, located at Seksyen 15, Shah Alam, and will be spreaded over approximately 20 acres, which is held by Magna Ecocity Sdn Bhd (MESB), a subsidiary of Magna Prima.
“As such, the subsidiary was badly affected with disruption in cash flow which caused financial constraint to meet the bank obligations then,” it said.
The market value of the land stood at RM200 million, per the valuation carried out in 2019, and as such the and market value is secured against the bank facilities with Alliance Bank, Magna Prima and MESB in the positive position.
The group said it is engaging with consultant to discuss with Alliance Bank on the terms of repayment and possibly rescheduling the facility.
“In the opinion of the company, Alliance Bank should not have proceeded with the legal proceedings. The company is actively scheduling for meetings and will submit a comprehensive proposal to reschedule the loan facilities in due course,” it said, adding there will not be any significant impact of the default in payment on the business, financials and operation of the remaining business of the group.
In a separate filing, Magna Prima announced that it saw a wider net loss of RM7 million for the first quarter ended March 31, from a net loss of RM3.18 million a year before, mainly due to the group only selling shop offices in its Kepong project during the quarter.
Revenue also dropped to RM1.99 million, from RM10.09 million previously.
“The board expects the current financial year to be challenging due to the current sentiment of the property market. Cash flow will remain tight. The board will continue to seek way to improve the company performance and cash flow for the current financial year,” it said.