Hwang hives Kenmark stake to 8%

Wednesday June 9, 2010
Hwang hives Kenmark stake to 8%
By B.K. SIDHU
bksidhu@thestar.com.my

PETALING JAYA: The Kenmark Industrial Co (M) Bhd saga continues with the man in the middle of the controversy, James Hwang, shrinking his stake in the furniture maker from 29.93% as at April 23 to 7.96% currently.

This should explain the heavy selling of the shares on May 31 to June 2 by several brokerages in the country and the buyer could well be Datuk Ishak Ismail, who now directly and indirectly controls 32% stake in Kenmark.

With Hwang’s stake down, Ishak is the single largest shareholder in the furniture maker. Hwang is still managing director of the company and is ill in China.

Kenmark’s shares were suspended by Bursa Malaysia at 9am yesterday pending clarification from the company as to why it posted such a shocking set of financial results with a net loss of RM146mil for the fourth quarter ended March 31, 2010.
Gani ... ‘We have now established the policies.’

The new directors were also hauled up by both Bursa and the Securities Commission to explain the huge losses.

By yesterday evening, Kenmark made all the necessary announcements and it must have furnished enough information for Bursa to allow its shares to resume trading today. Its shares were last traded at 27 sen.

“We met the authorities yesterday and explained the situation. They understand that we are new and they have been very helpful. We need to regularise and work on a new plan to move forward,’’ Kenmark executive chairman Datuk Abd Gani Yusof said.

Kenmark on Monday reported a net loss of RM146mil for 4Q10 versus a net loss of RM84,000 in the same corresponding period a year ago.

The company blamed lower revenue, higher cost of sales, provisions for doubtful debts and impairment of assets by certain subsidiaries for the huge losses.

Kenmark’s troubles began when Hwang disappeared and news of his disappearances triggered massive selling of the stock which plunged 68% on May 31.

On the same day, 413 of its employees were locked out from its premises at Port Klang after EON Bank appointed receivers to seal up the plant to protect its interest. Kenmark is a PN17 company.

The net loss was a huge drop, said Gani. The new directors found that there were no proper policies on debtors in place.

“We have now established the policies and hope to write back a lot,’’ Gani said.

In reply to queries from Bursa, Kenmark detailed out the breakdown of the RM141.6mil administrative expenses it provided for.

Of this, RM69mil was for doubtful debt, RM12mil for un-realised foreign exchange losses, RM41mil for impairment for fixed assets (two assets in China and one in Taiwan), RM3mil bank charges and exchange losses, and RM4mil for other administrative expenses.

It has five companies owing it money to the tune of RM44mil and the credit terms are 180 days. The company hopes to begin collection to recover the amounts.

Kenmark says it has no write down on inventories and the board wants the management team to come up with a weekly cashflow projection to ascertain funding requirements.

Yesterday Kenmark directors also met up with EON Bank officials to discuss on financing. It also hopes to solve amicably the demands for repayment of RM60mil by Export-Import Bank of Malaysia.

With the financial results submitted, Ho Soon Woon, one of the four new directors appointed to Kenmark last week will leave today for Vietnam to assess the situation at its plant there.