Ho Hup seeks court order to formulate scheme of arrangement

• Ho Hup said details of the scheme of arrangement will be announced later.

KUALA LUMPUR (April 22): After defaulting on loan facilities last week, Ho Hup Construction Co Bhd (KL:HOHUP) is seeking a court order to facilitate the restructure of its debt.

The company, which has been classified as a Practice Note 17 (PN17) issuer due to the loan default, on Monday filed an application at the High Court for an order "for a compromise or arrangement with the company's creditors for the purpose of formulating and proposing a scheme of arrangement".

The company is also seeking a restraining order to prevent legal action being taken against the company “to allow the company the necessary breathing space" to come out with the scheme of arrangement, said Ho Hup in a bourse filing.

It noted that upon filing the application, an automatic restraining order is granted to the company for a period of two months or until the application is decided by the court.

Ho Hup said details of the scheme of arrangement will be announced later.

“Upon approval of the proposed scheme of arrangements by the requisite majority of 75% of the total value of creditors present and voting at the court-convened creditors’ meeting, the proposed scheme of arrangement shall be deemed enforceable and binding on all scheme creditors of the proposed scheme of arrangements.

"As such, the terms of the proposed scheme of arrangement are subject to changes arising from any discussions or negotiations between the company and the creditors,” it added.

Ho Hup was classified as a PN17 company last Friday after its wholly owned unit Bukit Jalil Development Sdn Bhd defaulted on outstanding loan facilities of RM112.69 million.

The construction company, in its capacity as guarantor for Bukit Jalil Development, received a demand notice from Insas Credit & Leasing Sdn Bhd over the repayment of the outstanding amount.

With its PN17 status, Ho Hup must announce within three months whether its regularisation plan will significantly change its business direction. It then has 12 months to submit and secure approval for the plan — either from the Securities Commission if it involves major changes or from Bursa Securities if it does not.

Ho Hup has been loss-making for 13 consecutive quarters. For the fourth quarter ended Dec 31, 2024, its net loss widened to RM113.8 million from RM55.3 million a year earlier, as revenue fell nearly 60% to RM6.35 million from RM15.7 million.

As of end-December 2024, its current borrowings stood at RM320.3 million, with non-current borrowings at RM76.6 million. Total current assets stood at RM801.3 million, while non-current assets came in at RM195.4 million.

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