KUALA LUMPUR, June 21 — Builder Muhibbah Engineering Bhd’s recent rebound on the stock market ended almost before it began as its shares are down nearly 14 per cent from Friday closing.
The construction company slumped dramatically last Thursday after reports emerged that one of its major clients, Asia Petroleum Hub (APH) had been put under receivership by financier CIMB sending its shares down 20 per cent to RM1.52, its steepest drop in more than three years.
It recovered to RM1.60 on Friday after it announced that APH had identified an investor and was in negotiations to fully finance the completion of the APH project, including making due payments to contractors.
Muhibbah shares resumed their decline today despite the assurances as worries about its exposure to the APH continue to linger.
As at noon today, Muhibbah shares had fallen 15 sen to RM1.38 from RM1.53.
Its subsidiary Favalle Favco Bhd suffered a similar fate with its shares tumbling 14 sen to RM1.58 at noon today.
CIMB Research had in a report last week that the worst case scenario for Muhibbah was that it would have to write down the amount owed by APH which could push it into losses for the 2011 financial year and noted in its report yesterday that the outlook for the company hinges on the lifting of APH’s receivership status, which depends on whether RM2.4 billion in new investor funds can be secured.
APH has stopped paying Muhibbah on February 9 and still owes about RM371 million out of a total of about RM830 million.
RAM Rating Services said yesterday that Muhibbah’s RM130 million worth of Islamic bonds, which have a ‘AAA’ rating, were unaffected by the news of APH’s receivership status.
Singapore Business Times (BT) had reported on June 15 that the move by CIMB to put APH under receivership could spell the end for the development which was once billed as one of the world’s largest fully integrated terminals with storage capacity of 924,000 cubic metres, large trans-shipment capacity and multiple jetties — all located on a 40-ha reclaimed island off the coast of Johor.
The report also said that a tussle has emerged over the ownership of APH, involving its majority shareholder, private terminal operator KIC Oil and Gas, Malaysian tycoon Tan Sri Syed Mokhtar Albukhary, and an apparently Umno-linked company called Trek Perintis.
BT quoted finance executives familiar with the matter as saying that in 2006, CIMB granted APH a RM1.4 billion three-year bridge loan.
The report added that more than three years ago, the Cabinet decided that Seaport Terminal, a private company controlled by Syed Mokhtar should be allowed to take up a 35 per cent stake in the project but the tussle between Seaport and KIC remains unresolved.
