CEO Morning Brief

Bina Puri Said Restraining Order Sought Due to Lacklustre Construction Activities

Publish date: Fri, 09 Jun 2023, 08:51 AM
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TheEdge CEO Morning Brief

KUALA LUMPUR (June 8): Bina Puri Holdings Bhd said its wholly-owned subsidiary Bina Puri Sdn Bhd (BPSB) had applied for a restraining order due to lacklustre construction activities and the sluggish property market climate brought on by severe disruption of the overall operating environment that rose from the implementation of the movement control order (MCO).

This situation has resulted in a delay in construction projects and slower sales that declined revenue recognition, Bina Puri said in a bourse filing on Thursday (June 8), giving additional details on the restraining order granted to BPSB by the High Court on June 1.

The implication of the MCO also meant that the group was unable to progress projects, but it continued to incur certain fixed costs such as rental costs, staffing, and borrowing costs that reflected into a weak financial performance the last couple of years, the group added.

Subsequently, Bina Puri said high input costs that arose from the sharp increase in commodity prices and additional construction costs incurred (construction materials, personal protective equipment safety, and swab test kits) were not budgeted for, thus further contributing to its losses.

Bina Puri expects the operating environment for the construction business to continue to be challenging due to rising costs of materials, low rates caused by intense competition and lower margins.

As such, it said the restraining order is necessary for the group to restructure its finances and revive its financial situation. The group has appointed GTC Consulting Sdn Bhd as its financial advisor for the scheme.

In its earlier filing on June 2, Bina Puri said the court had granted BPSB leave to summon a meeting with its scheme creditors to approve a proposed scheme of arrangement between the company and its creditors.

The court's order also restrains all pending proceedings or actions against BPSB and the initiation of any proceedings and actions against BPSB for a period of three months, except by leave of court.

As of writing, Bina Puri shares stood at 4 sen, up half a sen or 14.29%. At this price, the group has a market capitalisation of RM134.79 million.

Source: TheEdge - 9 Jun 2023

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