Hatten Land says units owe RM605m under proposed debt restructuring

TWO Hatten Land subsidiaries owe a combined RM605 million (S$196.9 million) to scheme creditors, although the bulk of these debts will be erased as they are owed to group entities.

In a filing late Thursday night, the Catalist-listed property developer said total debt under MDSA Resources' proposed scheme of arrangement is about RM322 million. Some 79 per cent of this is owed to entities within the Hatten Land group, and will be eliminated at consolidation.

The balance debt of MDSA Resources thus amounts to RM68 million, which represents about 17 per cent of the group's total trade and other payables of RM403 million as at March 31, 2020, Hatten Land said in response to the Singapore Exchange's (SGX) queries.

For the other subsidiary, MDSA Ventures, total debt under its proposed scheme is RM283 million, of which about 84 per cent is owed to group entities and will be eliminated at consolidation.

The balance debt of MDSA Ventures totals RM45 million, or about 11 per cent of the group's total trade and other payables.

Earlier on Thursday, Hatten Land announced that the two subsidiaries were planning to undergo debt restructuring and had applied to the High Court of Malaysia for leave to call for creditors' meetings to consider and approve their proposed schemes.

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MDSA Resources and MDSA Ventures were the developers for integrated mixed-use projects Hatten City Phase 1 and 2 in Malacca, Malaysia. The Phase 1 project was completed in 2016, while Phase 2 was completed in 2018.

For its third quarter ended March 31, 2020, revenue contribution to the group was about 23.3 per cent or RM33.2 million from MDSA Resources, and 25.1 per cent or RM35.8 million from MDSA Ventures, Hatten Land said on Thursday night.

MDSA Resources has sold about 83 per cent of the 2,580 units developed in Hatten City Phase 1 as at March 31, 2020, while MDSA Ventures has sold some 79.5 per cent of the 1,734 units in Phase 2.

Hatten Land's board of directors believe the group is able to continue operating as a going concern, it said in response to SGX's queries.

This is after taking into account the group's net assets of RM370 million and net current assets of RM307 million as at March 31, 2020, as well as about RM1.3 billion of unsold completed properties. "These assets can be monetised through collection and sales to generate cash flow," Hatten Land said.

In addition, the group's repayment obligations for borrowings have been extended, and it has also implemented initiatives to manage and/or reduce operating costs such as salary adjustments and reducing non-essential expenses.

Hatten Land shares rose 0.1 Singapore cent or 1.4 per cent to close at 7.1 cents on Thursday, before it replied to SGX.