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Bursa Malaysia Securities Berhad (Bursa Malaysia Securities) has publicly reprimanded IRM Group Berhad (IRMGRP) for breaching paragraphs 9.03(1) and 9.04(l) of the Bursa Malaysia Securities Main Market Listing Requirements (Main LR) read together with paragraph 2.1(d) of Practice Note 1 (PN1) for failing to make an immediate announcement in respect of the default in payments of credit facilities by its major subsidiary, Industrial Resin (Malaysia) Sdn. Bhd. (IRMSB).
Paragraphs 9.03(1) and 9.04(l) of the Main LR read together with paragraph 2.1(d) of PN1 state that a listed issuer is required to immediately announce to the Exchange, irrespective of whether a demand has been made to the listed issuer, its subsidiaries or associated companies, as the case maybe, of default in payments of either interest, principal sums or both in respect of a credit facility where the total amount outstanding of the defaulted credit facility is 5% or more of the net assets of the listed issuer based on the latest published or announced financial statements.
The public reprimand was imposed pursuant to paragraph 16.19(1) of the Main LR after taking into consideration all facts and circumstances of the matter and upon completion of due process.
While Bursa Malaysia Securities has not found any of IRMGRP’s directors to have caused or permitted the breach by the company, Bursa Malaysia Securities wishes to highlight that it is the duty of the directors to maintain appropriate standards of responsibility and accountability in ensuring compliance of the Main LR. The Board of Directors of IRMGRP at the material time was as follows:-
- Dato’ Abd Karim bin Ahmad Tarmizi
- Dr. Baharuddin bin Abdul Ghani
- Dato’ Ir Che On @ Onn bin Hamzah
- Usman Ali bin Mustaffa
Bursa Malaysia Securities views the contravention seriously and has reminded IRMGRP and its Board of Directors of their obligation to uphold appropriate standards of responsibility and accountability to shareholders and the investing public.
BACKGROUND
IRMSB had defaulted in the trade facilities granted by CIMB Bank Berhad (CIMB) on 10 December 2012, Al-Rajhi Banking & Investment Corporation (Malaysia) Berhad (Al-Rajhi) on 20 March 2013 and Hong Leong Bank Berhad (HLBB) on 5 April 2013. However, IRMGRP only announced the default in payments on 25 February 2013 and 9 April 2013 respectively. The total amount outstanding of the defaulted trade facilities to CIMB, Al-Rajhi and HLBB as noted from IRMGRP’s announcements on 25 & 26 February 2013 and 9 April 2013 exceeded 5% of the company’s net assets respectively and cumulatively amounting to RM41,299,000 which represented 95.3% of the company’s net assets of RM43,349,000 and 96.2% of the company’s total borrowing of RM42,941,000 as at 30 September 2012.
IRMGRP represented that the company had started negotiation with CIMB in respect of the defaulted trade facility since December 2012 and submitted an official proposal for repayment scheme to CIMB, Al-Rajhi and HLBB on 18 February 2013 and 15 March 2013 respectively. However, the fact remains that IRMSB had not paid and defaulted on the amount due to CIMB, Al-Rajhi and HLBB. The negotiations and / or proposals for repayment of the trade facilities were merely steps taken to address the default and did not unwind the occurrence of an event of default where an immediate announcement was required in accordance with PN1.
