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Another blow for Yu Kuan Chon’s YNH as MARC downgrades sukuk

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Rating agency downgrades developer’s sukuk programme on concerns over its business and financial prospects.

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YNH’s plan to sell its 163 Retail Park mall in Mont Kiara and land parcel in Desa Sri Hartamas has been stymied by delays. (YNH pic)

PETALING JAYA:
YNH Property Bhd has been slapped with more bad news after MARC Ratings Bhd downgraded the beleaguered property developer’s Islamic Medium-Term Notes Programme (Sukuk Wakalah) to BBIS with a negative outlook.

The rating agency said the downgrade reflects heightening concerns over the group’s business and financial prospects.

“Since the negative placement in January, the rating agency notes that YNH has not made any meaningful progress that would have alleviated concerns about its ability to meet its upcoming financial obligations,” it said in an announcement yesterday.

The downgrade was made after MARC removed the sukuk programme from its negative watch, in which it has been placed since Jan 18.

The move in January was precipitated by YNH’s weak financial position, delayed asset disposals and material issues concerning its key shareholder that compounded the challenges the group faces to address its weakening credit profile, MARC said.

YNH currently has an outstanding RM323 million under the sukuk programme, of which the first tranche of RM153 million will mature on Feb 28, 2025.

The group is required to build up 50% of this amount through monthly payments of RM6.1 million into a reserve account from Feb 28, 2024, it noted.

However, YNH has struggled to meet this commitment, periodically lapsing into technical defaults, underscoring its weak liquidity position, MARC added.

As of end-March, the group had RM13 million in cash and short-term deposits, while total group borrowings amounted to a massive RM1.2 billion.

The rating agency noted that while visibility of progress billings from ongoing property developments remains modest at this juncture, it understands from YNH that sales performance of its Solasta project is improving.

“Should this trend continue, coupled with an accelerated pace to conclude its asset disposal plans including the sale of the 5.1-acre land parcel in Desa Sri Hartamas and 163 Retail Park mall in Mont Kiara, YNH would be better placed to improve its financial position,” it said.

YNH said in a bourse filing yesterday the conditional period of the sale and purchase agreement for the sale of 163 Retail Park to Sunway Real Estate Investment Trust has been extended by three months to Sept 26. This is the second extension for the deal. The conditional period ended on June 26.

The deadline of YNH’s RM170 million sale of the Desa Sri Hartamas land to Sunway Bhd had also been postponed by a year to May 12, 2025, the group announced last month. This was the fifth postponement of the deal’s completion.

SC sues Yu Kuan Chon

The latest setback comes on the heels of a suit filed by the Securities Commission against YNH’s largest shareholder and chairman, Yu Kuan Chon, for alleged market rigging and manipulation of Shangri-La shares between March and July 2018.

The regulator is seeking orders to compel Yu, 61, to pay disgorgement amounting to RM26.57 million, three times the gain from the alleged manipulation.

It is also seeking a RM1 million civil penalty and for him to be barred from managing any public company for five years, and from trading on the exchange for the same period.

Following the announcement on Wednesday, YNH’s shares tumbled almost 21% yesterday. Two other counters linked to the prominent investor – industrial mould manufacturer Rapid Synergy Bhd and agricultural manufacturer Imaspro Corp Bhd – dropped as much as 9% and 3%, respectively.

YNH saw a minor rebound today with its shares up 5.5 sen or 11% to 55 sen at 3.15pm, giving it a market capitalisation of RM291 million.

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