KUALA LUMPUR: Bintai Kinden Corporation Bhd will submit its business regularisation plan to the Securities Commission (SC) and Bursa Malaysia within three months from the date of Practice Note 17 (PN17) status.
Executive director Noor Azri Datuk Sri Noor Azerai said Bintai Kinden would announce the details of the regularisation plan as a "requisite announcement" with the details and sufficient information provided by our principal adviser.
"The necessary changes in the regularisation plan will hinge on Kolej Teknologi Islam Melaka Bhd's (KTIMB) honouring its debt obligations of RM49.8 million. Once this is settled, we can repay MBSB Bank Bhd and move forward with the necessary changes," Azri Azerai told the New Straits Times.
The PN17 classification came about because Bintai Kinden and its subsidiary Optimal Property Management Sdn Bhd (OPM) could not service a RM109.0 million, 17-year Islamic financing facility from MBSB.
OPM secured the contract valued at RM121.0 million by KTIMB, the operator of Universiti Melaka (UniMel), in January 2016.
The loan was taken to partially finance the UniMel campus student accommodations.
OPM was awarded a concession agreement comprising three years of construction and 22 years to maintain the student accommodations.
The student accommodations were completed in 2019.
On its part, KTIMB would pay OPM for the maintenance services. However, KTIMB and Melaka Chief Minister Incorporated (CMI Melaka) did not fulfil their part of obligations.
Azri Azerai said Bintai Kinden had been fulfilling its debt obligations under the MBSB Islamic financing facility and had paid RM18.6 million from March 2020 to December 2022 while collecting only RM3.7 million from KTIMB.
"As such, Bintai Kinden has been forking out its own funds to repay the Islamic financing facility," he sadded.
Azri Azerai said CMI Melaka had issued an irrevocable letter of undertaking to MBSB that obliged it to make up any shortfall in the availability charge rate (ACR) payable to OPM during the concession period.
"CMI Melaka has not adequately topped up the ACR shortfall, which means Bintai Kinden has to make up for it from its own funds. Despite the financial challenges, we have continued to maintain the accommodations for the sake of the students."
Azri Azerai pointed out that KTIMB was also required to pledge land or properties with a market value of not less than RM42.5 million to safeguard Bintai Kinden's credit risk arising from the concession agreement.
He said KTIMB did not fulfil the obligation, despite several reminders from OPM to it and CMI Melaka.
"We have also resorted to legal action against CMI Melaka as part of the course of action we are taking, with the court hearing scheduled for July."
On top of the failure to honour the obligations, Azri Azerai said KTIMB's payment to OPM had also been irregular, as it had resumed paying only since March 2023 after not doing so in January and February 2023.
"What is more, the monthly repayment would resume at a sum of RM150,000, which is inadequate to maintain the accommodation plus repay the Islamic financing facility," he said.
UniMel has 2,480 students residing on-campus as of December 2022, and at an estimated monthly hostel fee per student of RM180, the total fees collected are estimated at RM446,400.
Azri Azerai said Bintai Linden had requested and was granted a six-month moratorium by MBSB on payments related to the Islamic financing facility from July 2020 to December 2020.
This request was granted due to the Covid-19 pandemic, as no income was generated from the campus accommodations due to students staying at home.
He said the moratorium extension had resulted in the tenure of the financing facility being extended to September 2035 from March 2035 and further extended to March 2037 due to additional lockdowns and the inability to travel between states.
"For now, we are not requesting any moratorium from the bankers. Our PN17 classification is solely due to non-payment by KTIMB and CMI Melaka to us.
"Once this is solved, we can be uplifted from the PN17 status. Bintai Kinden is still running the business with projects in hand. Our total unbilled orderbook stands at RM142.95 million," Azri Azerai said, adding that the company had a track record of delivering all its jobs on time.
"Because of our expertise and experience, Tenaga Nasional Bhd has awarded us several jobs, including RM14.2 million recently to install transformer bays in Pasir Besar, Negri Sembilan.
"The only troubled subsidiary we have is OPM, and the financial issues can be resolved as soon as KTIMB honours its debt obligations. Our current liabilities mainly stem from the UniMel project," he added.