Chaswood Resources says Malaysian unit in debt restructuring talks

SINGAPORE -  Catalist-listed Chaswood Resources Holdings said on Monday (Nov 20) its wholly-owned Malaysian subsidiary has started restructuring proceedings on RM22 million (S$7.18 million) of credit facilities.

Under the proposed debt restructuring, the unit, Chaswood Resources Sdn Bhd (CSRB), is holding discussions with its principal lenders - CIMB Bank Berhad, Malayan Banking Berhad and AmBank (M) Berhad - on the restructuring and rescheduling of loan repayments.

While the talks are ongoing, restaurant operator CRSB will temporarily cease repayment on all of its borrowings with the lenders.

It has also obtained a 90-day moratorium order from the High Court of Malaysia on Nov 17, 2017, against the enforcement of winding up proceedings or appointment of receiver or manager over all the firm's assets by the lenders.

CSRSB has net current liabilities of approximately RM50 million as at Sept 30, 2017. It recorded consecutive after-tax losses of approximately RM5.7 million, RM9.7 million and RM9.0 million for the 2014, 2015 and 2016 financial years respectively.

Chaswood Resources said it believes CSRB is be able to continue as a going concern and has sufficient working capital for the next 12 months, barring any unforeseen circumstances, and subject to the successful outcome of the proposed debt restructuring, fund raising options, and business rationalisation and market conditions.

In terms of business rationalisation, CSRB is undertaking cost-cutting measures at its head office and restaurants, negotiating with landlords and suppliers to reduce or contain operating costs, improving operational efficiencies, closing non-performing restaurants.

Chaswood Resources said its unit's performance, which relies heavily on the health of consumer sentiment, has been adversely affected due to the protracted and continuing economic downturn in Malaysia in the last three years.