Malaysia’s Oilfab Hits Financial Strife

8 October 2009 (Last Updated October 8th, 2009 18:30)

Malaysian offshore engineering company Oilfab is facing financial difficulty after its parent company failed to pay lenders a principal repayment of 20m ringgit (about $6m). Oilcorp, a subsidiary of Kuala Lumpur listed Oilcorp, failed to pay 10m ringgit as part of its 70m debt last mon

Malaysian offshore engineering company Oilfab is facing financial difficulty after its parent company failed to pay lenders a principal repayment of 20m ringgit (about $6m).

Oilcorp, a subsidiary of Kuala Lumpur listed Oilcorp, failed to pay 10m ringgit as part of its 70m debt last month and was given an extension until yesterday, when it was required to pay back 20m ringgit.

Last month the Malaysian Rating Corporation (MARC) raised concerns that the company may not be able to settle the debt and has now downgraded its rating on the company’s finance facility.

Oilfab has also received a winding up petition, claiming more than 1.2m ringgit, by Goh Chiu Construction. Goh Chiu claims that Oilfab owes them the amount as part of the contract sum for the design and build of wharf at the company’s Pulau Indah fabrication yard and that it is unable to pay its debts.

The matter will be heard by Malaysia’s Johor Bahru High Court on 6 January next year.

In an announcement to the Malaysian stock exchange, Oilcorp said it is seeking legal advice on the matter and that the winding-up proceeding will have a major impact on the financial and operational aspects of the group only if Oilfab is wound up.